Alzheimer’s disease (AD) is a chronic neurodegenerative disease characterized by progressive neuronal loss and cognitive decline. Oligomeric amyloid β (oAβ) is involved in the pathogenesis of AD by affecting synaptic plasticity and inhibiting long-term potentiation. Although several lines of evidence suggests that microglia, the resident immune cells in the central nervous system (CNS), are neurotoxic in the development of AD, the mechanism whether or how oAβ induces microglial neurotoxicity remains unknown. Here, we show that oAβ promotes the processing of pro-interleukin (IL)-1β into mature IL-1β in microglia, which then enhances microglial neurotoxicity. The processing is induced by an increase in activity of caspase-1 and NOD-like receptor family, pyrin domain containing 3 (NLRP3) via mitochondrial reactive oxygen species (ROS) and partially via NADPH oxidase-induced ROS. The caspase-1 inhibitor Z-YVAD-FMK inhibits the processing of IL-1β, and attenuates microglial neurotoxicity. Our results indicate that microglia can be activated by oAβ to induce neuroinflammation through processing of IL-1β, a pro-inflammatory cytokine, in AD.