Although accumulating evidence demonstrates that white matter degeneration contributes to pathology in Alzheimer's disease (AD), the underlying mechanisms are unknown. In order to study the roles of the amyloid-beta peptide in inducing oxidative stress damage in white matter of AD, we investigated the effects of amyloid-beta peptide 25-35 (Abeta) on proinflammatory cytokine tumor necrosis factor-alpha (TNF-alpha)-induced inducible nitric oxide synthase (iNOS) in cultured oligodendrocytes (OLGs). Although Abeta 25-35 by itself had little effect on iNOS mRNA, protein, and nitrite production, it enhanced TNF-alpha-induced iNOS expression and nitrite generation in OLGs. Abeta, TNF-alpha, or the combination of both, increased neutral sphingomyelinase (nSMase) activity, but not acidic sphingomyelinase (aSMase) activity, leading to ceramide accumulation. Cell permeable C2-ceramide enhanced TNF-alpha-induced iNOS expression and nitrite generation. Moreover, the specific nSMase inhibitor, 3-O-methyl-sphingomyelin (3-OMS), inhibited iNOS expression and nitrite production induced by TNF-alpha or by the combination of TNF-alpha and Abeta. Overexpression of a truncated mutant of nSMase with a dominant negative function inhibited iNOS mRNA production. 3-OMS also inhibited nuclear factor kappaB (NF-kappaB) binding activity induced by TNF-alpha or by the combination of TNF-alpha and Abeta. These results suggest that neutral sphingomyelinase/ceramide pathway is required but may not be sufficient for iNOS expression induced by TNF-alpha and the combination of TNF-alpha and Abeta.