Alzheimer’s disease (AD) is a progressive neurodegenerative disorder characterized by massive neuronal loss in the brain. Both cortical glutamatergic neurons and basal forebrain cholinergic neurons (BFCNs) in the AD brain are selectively vulnerable. The degeneration and dysfunction of these two subtypes of neurons are closely associated with the cognitive decline of AD patients. The determination of cellular and molecular mechanisms involved in AD pathogenesis, especially in the early stage, will largely facilitate the understanding of this disease and the development of proper intervention strategies. However, due to the inaccessibility of living neurons in the brains of patients, it remains unclear how cortical glutamatergic neurons and BFCNs respond to pathological stress in the early stage of AD. In this study, we established in vitro differentiation systems that can efficiently differentiate patient-derived iPSCs into BFCNs. We found that AD-BFCNs secreted less Aβ peptide than cortical glutamatergic neurons did, even though the Aβ42/Aβ40 ratio was comparable to that of cortical glutamatergic neurons. To further mimic the neurotoxic niche in AD brain, we treated iPSC-derived neurons with Aβ42 oligomer (AβO). BFCNs are less sensitive to AβO induced tau phosphorylation and expression than cortical glutamatergic neurons. However, AβO could trigger apoptosis in both AD-cortical glutamatergic neurons and AD-BFCNs. In addition, AD iPSC-derived BFCNs and cortical glutamatergic neurons exhibited distinct electrophysiological firing patterns and elicited different responses to AβO treatment. These observations revealed that subtype-specific neurons display distinct neuropathological changes during the progression of AD, which might help to understand AD pathogenesis at the cellular level.