Alzheimer's disease (AD) is associated with progressive memory decline. Hippocampal place cells are a well understood candidate for the neural basis of one type of memory in rodents; these cells identify the animal's location in an environment and are crucial for spatial memory and navigation. We have recorded place cells in the Tg2576 mouse model of AD, and we report that aged (16 mo) but not young (3 mo) transgenic mice show degraded neuronal representations of the environment. The level of place cell degradation correlates with the animals' (poorer) spatial memory as tested in a forced-choice spatial alternation T-maze task and with hippocampal, but not neocortical, amyloid plaque burden. Place cell recording provides a sensitive assay for measuring the amount and rate of functional deterioration in animal models of dementia as well as providing a quantifiable physiological indication of the beneficial effects of potential therapies.