Alzheimer's disease (AD) is a neurodegenerative disorder characterized by progressive memory loss and cognitive disturbance as a consequence of the loss of cholinergic neurons in the brain, neuritic plaques and hyperphosphorylation of TAU protein. Although the underlying mechanisms leading to these events are unclear, mutations in presenilin 1 (PSEN1), e.g., E280A (PSEN1 E280A), are causative factors for autosomal dominant early-onset familial AD (FAD). Despite advances in the understanding of the physiopathology of AD, there are no efficient therapies to date. Limitations in culturing brain-derived live neurons might explain the limited effectiveness of AD research. Here, we show that mesenchymal stromal (stem) cells (MSCs) can be used to model FAD, providing novel opportunities to study cellular mechanisms and to establish therapeutic strategies. Indeed, we cultured MSCs with the FAD mutation PSEN1 E280A and wild-type (WT) PSEN1 from umbilical cords and characterized the transdifferentiation of these cells into cholinergic-like neurons (ChLNs). PSEN1 E280A ChLNs but not WT PSEN1 ChLNs exhibited increased intracellular soluble amyloid precursor protein (sAPPf) fragments and extracellular Aβ42 peptide and TAU phosphorylation (at residues Ser202/Thr205), recapitulating the molecular pathogenesis of FAD caused by mutant PSEN1. Furthermore, PSEN1 E280A ChLNs presented oxidative stress (OS) as evidenced by the oxidation of DJ-1Cys106-SH into DJ-1Cys106-SO3 and the detection of DCF-positive cells and apoptosis markers such as activated pro-apoptosis proteins p53, c-JUN, PUMA and CASPASE-3 and the concomitant loss of the mitochondrial membrane potential and DNA fragmentation. Additionally, mutant ChLNs displayed Ca2+ flux dysregulation and deficient acetylcholinesterase (AChE) activity compared to control ChLNs. Interestingly, the inhibitor JNK SP600125 almost completely blocked TAU phosphorylation. Our findings demonstrate that FAD MSC-derived cholinergic neurons with the PSEN1 E280A mutation provide important clues for the identification of targetable pathological molecules.