Hemoglobin (Hb) is well-known for transporting oxygen in red blood cells within blood vessels. However, its role in the brain has been largely unknown. Here, we report that Hb, found in hippocampal astrocytes of both animal models and Alzheimer's disease (AD) patients, displays significant antioxidant effects through its H2O2-decomposing peroxidase activity. To counteract the harmful effects of aberrant H2O2-production in AD, we developed KDS12025, a BBB-permeable small molecule that effectively enhances the H2O2-decomposing activity of Hb by 100-fold, even at very low level of Hb. KDS12025 reduces in astrocytes and reverses memory impairment in AD models. Gene-silencing of Hbbeta abrogates the enhancing effect of KDS12025 in both culture and animal models of AD. We propose boosting Hb's peroxidase activity as a new therapeutic approach for AD treatment.