Mechanisms underlying cognitive dysfunction following traumatic brain injury (TBI) partially due to abnormal amyloid processor protein (APP) cleavage and neural hyperactivity. Binding of the extension domain of APP (ExD17) to the GABAbR1 receptor results in reduced neural activity, which might play a role in the mechanisms of cognitive dysfunction caused by TBI. Stretch-induced injury was utilized to establish a cell injury model in HT22 cells. The TBI model was created by striking the exposed brain tissue with a free-falling weight. Topical or intraperitoneal administration of ExD17 was performed. Cell viability was assessed through a cell counting kit-8 assay, while intracellular Ca2+ was measured using Fluo-4. Western blotting was used to investigate the expression of APP amyloidogenic cleavage proteins, GABAbR1, phospholipase C (PLC), PLCB3, and synaptic proteins. ELISA was performed to analyze the levels of Aβ42. Seizures were assessed using electroencephalography (EEG). Behaviors were evaluated through the novel object recognition test, open field test, elevated plus maze test, and nest-building test. ExD17 improved cell viability and reduced intracellular calcium in the cell injury model. The treatment also suppressed the increased expression of APP amyloidogenic cleavage proteins and Aβ42 in both cell injury and TBI models. ExD17 treatment reversed the abnormal expression of GABAbR1, GRIA2, p-PLCG1/PLCG1 ratio, and p-PLCB3/PLCB3 ratio. In addition, ExD17 treatment reduced neural activity, seizure events, and their duration in TBI. Intraperitoneal injection of ExD17 improved behavioral outcomes in the TBI mouse model. ExD17 treatment results in a reduction of amyloidogenic APP cleavage and neuroexcitotoxicity, ultimately leading to an improvement in the behavioral deficits observed in TBI mice.