It is well established that Alzheimer's amyloid beta-peptides reduce the membrane barrier to ion transport. The prevailing model ascribes the resulting interference with ion homeostasis to the formation of peptide pores across the bilayer. In this work, we examine the interaction of soluble prefibrillar amyloid beta (Abeta(1-42))-oligomers with bilayer models, observing also dramatic increases in ion current at micromolar peptide concentrations. We demonstrate that the Abeta-induced ion conductances across free-standing membranes and across substrate-supported "tethered" bilayers are quantitatively similar and depend on membrane composition. However, characteristic signatures of the molecular transport mechanism were distinctly different from ion transfer through water-filled pores, as shown by a quantitative comparison of the membrane response to Abeta-oligomers and to the bacterial toxin alpha-hemolysin. Neutron reflection from tethered membranes showed that Abeta-oligomers insert into the bilayer, affecting both membrane leaflets. By measuring the capacitance of peptide-free membranes, as well as their geometrical thicknesses, the dielectric constants in the aliphatic cores of 1,2-dioleoyl-sn-glycero-3-phosphocholine and 1,2-diphytanoyl-sn-glycero-3-phosphocholine bilayers were determined to be epsilon = 2.8 and 2.2, respectively. The magnitude of the Abeta-induced increase in epsilon indicates that Abeta-oligomers affect membranes by inducing lateral heterogeneity in the bilayers, but an increase in the water content of the bilayers was not observed. The activation energy for Abeta-induced ion transport across the membrane is at least three times higher than that measured for membranes reconstituted with alpha-hemolysin pores, E(a) = 36.8 vs. 9.9 kJ/mol, indicating that the molecular mechanisms underlying both transport processes are fundamentally different. The Abeta-induced membrane conductance shows a nonlinear dependence on the peptide concentration in the membrane. Moreover, E(a) depends on peptide concentration. These observations suggest that cooperativity and/or conformational changes of the Abeta-oligomer particles upon transfer from the aqueous to the hydrocarbon environment play a prominent role in the interaction of the peptide with the membrane. A model in which Abeta-oligomers insert into the hydrophobic core of the membrane-where they lead to a local increase in epsilon and a concomitant reduction of the membrane barrier-describes the experimental data quantitatively.