The present study was undertaken to elucidate the role of PI3-kinase signaling in memory enhancing potential of caffeic acid phenethyl ester (CAPE) against cognitive defects in rats after centrally administered streptozotocin as a model of Alzheimer's disease. The Morris water maze and elevated plus maze paradigms showed profound loss of memory in adult Wistar rats (180-200 g) injected with streptozotocin (3 mg/kg) bilaterally (STZ-ICV) on day 1 and 3. Intraperitoneal administration of CAPE (6 mg/kg, i.p., 28 days) attenuated STZ-ICV triggered memory loss in rats. Treatment with PI3-kinase inhibitor (wortmannin, 5 mu g/rat, ICV) or NOS blocker (L-NAME, 20 mg/kg, i.p., 28 days) interfered with memory restorative function of CAPE in STZ treated rats. In biochemical analysis markers of oxidative stress (TBARS, GSH, SOD, CAT), nitrite, AChE, TNF-alpha, eNOS and NF kappa B were measured in brain of rats on day 28. Interestingly, L-Arginine (100 mg/kg, i.p., 28 days) group exhibited moderate (p > 0.05) decline in memory functions. The brain oxidative stress, TNF-alpha, AChE activity and NF kappa B levels were elevated, and eNOS level was lowered by STZ-ICV treatment. Administration of CAPE lowered oxidative stress, AChE, nitrite and TNF-alpha levels in brain of rats. The eNOS level was enhanced and NF kappa B level was decreased by CAPE in STZ treated rats. Wortmannin injection elevated the brain oxidative stress, AChE activity and TNF-alpha levels, and decreased the nitrite, eNOS and NF.B level. Rise of brain oxidative stress parameters, AChE activity, TNF-alpha, eNOS and NF kappa B levels, and decline in brain nitrite content was observed in L-NAME treated group. L-Arginine administration showed modest effects (p > 0.05) on oxidative stress parameters. Brain nitrite content was enhanced although eNOS, NF kappa B levels, and AChE activity was decimated by L-Arginine treatment. It can be concluded that PI3-kinase mediated nitric oxide facilitation is an essential feature of CAPE action in STZ-ICV treated rats.