Endosomal trafficking and amyloidogenic cleavage of amyloid precursor protein (APP) is believed to play a role in the neurodegeneration observed in Alzheimer's disease (AD). Recent evidence has suggested that packaging and secretion of APP and its amyloidogenic cleaved products into small extracellular vesicles (EVs) may facilitate uptake of these neurotoxic factors during disease progression. However, the molecular mechanisms underlying trafficking of APP into EVs are poorly understood. In this study, the mechanism and impact of APP trafficking into extracellular vesicles (EVs) were assessed by a series of inducible gene knockdowns. We demonstrate that vesicle-associated proteins Alix and Syntenin-1 are essential for proper subcellular localization and efficient EV secretion of APP via an endosomal sorting complexes required for transport (ESCRT)-independent pathway. The neurotoxic C-terminal fragment (CTFβ) of APP is similarly secreted in association with small vesicles. These mechanisms are conserved in terminally differentiated neuron-like cells. Furthermore, knockdown of Alix and Syntenin-1 alters the subcellular localization of APP, sequestering the precursor protein to endoplasmic reticulum and endolysosomal compartments, respectively. Finally, transfer of small EVs containing mutant APP confers an increase in reactive oxygen species production and neurotoxicity to human induced pluripotent stem cell-derived cortical neurons and naïve primary neurons, an effect that is ameliorated by Alix and Syntenin-1 depletion. Altogether these findings elucidate a novel mechanism for understanding the intracellular trafficking of APP and CTFβ into secreted extracellular vesicles, and the resultant potential impact on neurotoxicity in the context of Alzheimer's disease amyloidopathy.