Adeno-associated viral (AAV) vector-based gene therapy is gaining foothold as a treatment option for a variety of genetic neurological diseases with encouraging clinical results. Nonetheless, dose-dependent toxicities and severe adverse events have emerged in recent clinical trials through mechanisms that remain unclear. We have modelled here the impact of AAV transduction in the context of cell models of the human central nervous system (CNS), taking advantage of induced pluripotent stem cell-based technologies. Our work uncovers vector-induced cell-intrinsic innate immune mechanisms that contribute to apoptosis in 2D and 3D models. While empty AAV capsids were well tolerated, the AAV genome triggered p53-dependent DNA damage responses across CNS cell types followed by induction of IL-1R- and STING-dependent inflammatory responses. In addition, transgene expression led to MAVS-dependent signaling and activation of type I interferon (IFN) responses. Cell-intrinsic and paracrine apoptosis onset could be prevented by inhibiting p53 or acting downstream of STING- and IL-1R-mediated responses. Activation of DNA damage, type I IFN and CNS inflammation were confirmed in vivo, in a mouse model. Together, our work identifies the cell-autonomous innate immune mechanisms of vector DNA sensing that can potentially contribute to AAV-associated neurotoxicity.