Currently, all the existing treatments for Alzheimer’s disease (AD) fail to stall progression due to longer duration of time between onset of the symptoms and diagnosis of the disease, raising the necessity of effective diagnostics and novel treatment. Specific molecular regulation of the onset and progression of disease is not yet elucidated. This warranted investigation of the role of Wnt signaling regulators which are thought to be involved in neurogenesis. The AD model was established using amyloid beta (Aβ) in human mesenchymal stem cells derived from amniotic membranes which were differentiated into neuronal cell types. In vivo studies were carried out with Aβ or a Wnt antagonist, AD201, belonging to the sFRP family. We further created an AD201-knockdown in vitro model to determine the role of Wnt antagonism. BACE1 upregulation, ChAT and α7nAChR downregulation with synapse and functionality loss with increases in ROS confirmed the neurodegeneration. Reduced β-catenin and increased AD201 expression indicated Wnt/canonical pathway inhibition. Similar results were exhibited in the in vivo study along with AD-associated behavioural and molecular changes. AD201-knockdown rescued neurons from Aβ-induced toxicity. We demonstrated for the first time a role of AD201 in Alzheimer’s disease manifestation, which indicates a promising disease target and biomarker.