The neurodegenerative mechanisms of Alzheimer’s disease (AD) are not fully understood, but it is believed that amyloid beta (Aβ) peptide causes oxidative stress, neuroinflammation, and disrupts metabotropic glutamate receptor 5 (mGluR5) signaling by interacting with cholesterol and caveolin-1 (Cav-1) in pathogenic lipid rafts. This study examined the effect of 2-hydroxypropyl-β-cyclodextrin (HP-CD) on cholesterol, oxidative stress (total oxidant status), neuroinflammation (TNF-α), and mGluR5 signaling molecules such as PKCβ1, PKCβ2, ERK1/2, CREB, BDNF, and NGF in Aβ (1-42)-induced neurotoxicity. The Sprague-Dawley rats were divided into four groups: control (saline), Aβ (1-42), HP-CD (100 mg/kg), and Aβ (1-42) + HP-CD (100 mg/kg). All groups received bilateral stereotaxic injections of Aβ (1–42) or saline into the hippocampus. After surgery, HP-CD was administered intraperitoneally (ip) for 7 days. Cholesterol, TNF-α, and TOS levels were measured in synaptosomes isolated from hippocampus tissue using spectrophotometry, fluorometry, and enzyme immunoassay, respectively. The gene expressions of Cav-1, mGluR5, PKCβ1, PKCβ2, ERK1/2, CREB, BDNF, and NGF in hippocampus tissue were evaluated using reverse transcription PCR after real-time PCR analysis. Treatment with Aβ (1-42) significantly elevated cholesterol, TOS, TNF-α, Cav-1, PKCβ2, and ERK1/2 levels. Additionally, mGluR5, CREB, and BDNF levels were shown to be lowered. HP-CD reduced cholesterol, TOS, and TNF-α levels while increasing mGluR5, CREB, and BDNF in response to Aβ (1–42) treatment. These findings indicate that HP-CD may have neuroprotective activity due to the decreased levels of cholesterol, oxidative stress, and neuroinflammation, as well as upregulated levels of mGluR5, CREB, and BDNF.