Mitochondrial dysfunction is a prominent feature of Alzheimer disease but the underlying mechanism is unclear. In this study, we investigated the effect of amyloid precursor protein (APP) and amyloid beta on mitochondrial dynamics in neurons. Confocal and electron microscopic analysis demonstrated that approximately 40% M17 cells overexpressing WT APP (APPwt M17 cells) and more than 80% M17 cells overexpressing APPswe mutant (APPswe M17 cells) displayed alterations in mitochondrial morphology and distribution. Specifically, mitochondria exhibited a fragmented structure and an abnormal distribution accumulating around the perinuclear area. These mitochondrial changes were abolished by treatment with beta-site APP-cleaving enzyme inhibitor IV. From a functional perspective, APP overexpression affected mitochondria at multiple levels, including elevating reactive oxygen species levels, decreasing mitochondrial membrane potential, and reducing ATP production, and also caused neuronal dysfunction such as differentiation deficiency upon retinoic acid treatment. At the molecular level, levels of dynamin-like protein 1 and OPA1 were significantly decreased whereas levels of Fis1 were significantly increased in APPwt and APPswe M17 cells. Notably, overexpression of dynamin-like protein 1 in these cells rescued the abnormal mitochondrial distribution and differentiation deficiency, but failed to rescue mitochondrial fragmentation and functional parameters, whereas overexpression of OPA1 rescued mitochondrial fragmentation and functional parameters, but failed to restore normal mitochondrial distribution. Overexpression of APP or Abeta-derived diffusible ligand treatment also led to mitochondrial fragmentation and reduced mitochondrial coverage in neuronal processes in differentiated primary hippocampal neurons. Based on these data, we concluded that APP, through amyloid beta production, causes an imbalance of mitochondrial fission/fusion that results in mitochondrial fragmentation and abnormal distribution, which contributes to mitochondrial and neuronal dysfunction.