Phosphazine and phosphazide derivatives are described herein as a new class of selective and potent acetylcholinesterase (AChE) inhibitors and β-amyloid aggregation inhibitors. Phosphazines (5–7) were synthesized smoothly via a redox-condensation reaction of 1,2-bis(diphenylphosphino)ethane with different amines derivatives in the presence of dialkyl azodicarboxylate (Staudinger reaction) while phosphazides (8) via electrophilic attack of azido derivatives. Structures of the synthesized compounds were justified on the basis of compatible elementary and spectroscopic analyses. All the compounds were evaluated for their acetylcholinesterase inhibitory activity. The most three potent compounds (5b-c and 8b) showing AChE IC50 values (29.85–34.96 nM) comparable to that of donepezil (34.42 nM) were subjected to further investigation by testing their butyrylcholinesterase, MMP-2 and self-induced Aβ aggregation inhibition activity. Especially, the coumarin phosphazide derivative (8b) presented the best AChE inhibition selectivity index (IC50 = 34.96 nM, AChE/BuChE; 3.81) together with good inhibition ability against MMP-2 (IC50 = 441.33 nM) and self-induced Aβ1-42 aggregation (IC50 = 337.77 nM). In addition, the inhibition of metal-induced Aβ aggregation by 8b was confirmed by thioflavine T fluorescence. The most potent effect of 8b was observed on the Zn2+-induced Aβ42 aggregation. Kinetic study of compound 8b suggested it to be a competitive AChE inhibitor. Also, it specifically chelates metal and is predicted to be permeable to BBB. It also possesses low toxicity on SH-SY5Y neuroblastoma cells with a safety index of 15.37. In addition, it was demonstrated that compound 8b can improve the cognitive impairment of scopolamine-induced model in mice with % alternations and transfer latency time comparable to that of donepezil. Also, a docking study was carried out and it was in accordance with the in vitro results. These promising in vitro and in vivo findings highlight compound 8b as a possible drug candidate in searching for new multifunctional AD drugs.