Alzheimer's disease (AD) is an incurable neurodegenerative disease characterised clinically by learning and memory impairments. Amyloid beta (Aβ) peptide-induced synaptic dysfunction is a pathological process associated with early-stage AD. Here, we show that paracrine action of human umbilical cord blood-derived-mesenchymal stem cells (hUCB-MSCs) protects the hippocampus from synaptic-density loss in in vitro and in vivo AD models. To identify paracrine factors underlying this rescue effect, we analysed hUCB-MSCs' secretome co-cultured with Aβ42-treated mouse hippocampal neurons. Thrombospondin-1 (TSP-1), a protein secreted by hUCB-MSCs in in vitro and 5XFAD AD mouse models, was selected for study. Treatment with exogenous recombinant TSP-1 or co-cultures with hUCB-MSCs significantly increased expression of synaptic-density markers, such as synaptophysin (SYP) and post-synaptic density protein-95 (PSD-95) in Aβ42-treated mouse hippocampal neurons. Knockdown of TSP-1 expression in hUCB-MSCs through small interfering RNA (siRNA) abolished the reversal of Aβ42-induced hippocampal synaptic-density loss. We demonstrate that the rescue effect of hUCB-MSC-secreted TSP-1 was mediated by neuroligin-1 (NLGN1) or α2δ-1 receptors. Interestingly, NLGN1 and α2δ-1 expression, which was reduced in Aβ42-treated hippocampal neurons, increased in co-cultures with hUCB-MSCs or exogenous TSP-1. Together, these findings suggest that hUCB-MSCs can attenuate Aβ42-induced synaptic dysfunction by regulating TSP-1 release, thus providing a potential alternative therapeutic option for early-stage AD.