Amyloid beta (Aβ) is a pathologic hallmark of Alzheimer’s disease (AD), however, the mechanism of Aβ neurotoxicity is not fully understood. Exosomes associate with Aβ, but it is not clear how this association would affect Aβ neurotoxicity. We report that the sphingolipid ceramide mediates neurotoxicity of Aβ. We show that sera and brains from AD transgenic mouse model (5xFAD) and sera from AD patients, but not the WT or healthy controls, contain a subpopulation of astrocyte-derived exosomes that are enriched with ceramide and are prone to aggregation (termed astrosomes) as confirmed by nanoparticle tracking and cluster analyses. When taken up by Neuro2A cells and human iPS cell-derived neurons, these astrosomes are shuttled to mitochondria where they induce mitochondria clustering, evident by elevation of expression of the fission protein dynamin related protein1 (Drp1). Using proximity ligation assays (PLA), we show that Aβ associates with voltage dependent anion channel 1 (VDAC1), a key protein in mitochondria-mediated apoptosis. PLA signals colocalized with ceramide cotransported with Aβ by astrosomes. The interaction between Aβ and VDAC1 leads to caspase3 activation and subsequently apoptosis, which was validated in vivo. This effect was mitigated by removal of the ceramide enriched exosomes from the exosomes pool. Interestingly, the novel ceramide analog N-oleoyl serinol (S18) prevented the aggregation of exosomes, and Aβ association with astrosomes, and reduced Aβ interaction with VDAC1. Our data suggests that association of Aβ with ceramide in astrosomes enhances Aβ interaction with VDAC1 and mediates Aβ neurotoxicity in AD, which can be prevented by novel ceramide analogs.