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Abstract Background Stem cell transplantation is a fascinating therapeutic approach for the treatment of many neurodegenerative disorders; however, clinical trials using stem cells have not been as effective as expected based on preclinical studies. The aim of this study is to validate the hypothesis that human neural crest-derived nasal turbinate stem cells (hNTSCs) are a clinically promising therapeutic source of adult stem cells for the treatment of Alzheimer’s disease (AD). Methods hNTSCs were evaluated in comparison with human bone marrow-derived mesenchymal stem cells (hBM-MSCs) according to the effect of transplantation on AD pathology, including PET/CT neuroimaging, immune status indicated by microglial numbers and autophagic capacity, neuronal survival, and cognition, in a 5 × FAD transgenic mouse model of AD. Results We demonstrated that hNTSCs showed a high proliferative capacity and great neurogenic properties in vitro. Compared with hBM-MSC transplantation, hNTSC transplantation markedly reduced Aβ42 levels and plaque formation in the brains of the 5 × FAD transgenic AD mice on neuroimaging, concomitant with increased survival of hippocampal and cortex neurons. Moreover, hNTSCs strongly modulated immune status by reducing the number of microglia and the expression of the inflammatory cytokine IL-6 and upregulating autophagic capacity at 7 weeks after transplantation in AD models. Notably, compared with transplantation of hBM-MSCs, transplantation of hNTSCs significantly enhanced performance on the Morris water maze, with an increased level of TIMP2, which is necessary for spatial memory in young mice and neurons; this difference could be explained by the high engraftment of hNTSCs after transplantation. Conclusion The reliable evidence provided by these findings reveals a promising therapeutic effect of hNTSCs and indicates a step forward the clinical application of hNTSCs in patients with AD.