Treatment with melatonin is routinely prescribed for its potent antioxidant and cognitive‐promoting effects, nevertheless, it has yet to find neuromodulatory effects in normal and disease conditions. Therefore, to investigate its neuromodulatory mechanisms, melatonin was systemically administered over 10 consecutive days to both intracortical normal saline‐ and amyloid‐β 1‐42 (Aβ) peptide‐injected rats. At the behavioral level, treatment with melatonin was associated with reduced efficacy in restoring Aβ‐induced deficit in passive‐avoidance memory. Whole‐cell patch‐clamp recordings from CA1 pyramidal neurons revealed that melatonin treatment reduced spontaneous and evoked intrinsic excitability in control rats while exerting a reduction of spontaneous, but not evoked activity, in the Aβ‐injected group. Interestingly, treatment with melatonin enhances after‐hyperpolarization in control, but not Aβ‐injected rats. In contrast, our voltage‐clamp study showed that Ih current is significantly enhanced by Aβ injection, and this effect is further strengthened by treatment with melatonin in Aβ‐injected rats. Finally, we discovered that the transcription of melatonin receptors 1 (MT1) and 2 (MT2) is significantly upregulated in the hippocampi of Aβ‐injected rats. Collectively, our study demonstrates that systemic treatment with melatonin has differential neuromodulation on CA1 neuronal excitability, at least in part, via differential effects on after‐hyperpolarization and Ih currents due to Aβ‐induced neurotoxicity.