Previous studies have shown tumor necrosis factor-alpha (TNF-α) may impact neurodegeneration in Alzheimer’s disease (AD) by regulating amyloid-β and tau pathogenesis. However, it is unclear whether TNF-α has a role in a cholesterol-fed rabbit model of AD or TNF-α affects the electrophysiological properties of rabbit hippocampus. This study was designed to investigate whether long-term feeding of cholesterol diet known to induce AD pathology regulates TNF-α expression in the hippocampus and whether TNF-α would modulate electrophysiological properties of rabbit hippocampal CA1 neurons. TNF-α ELISA showed dietary cholesterol increased hippocampal TNF-α expression in a dose-dependent manner. Whole-cell recordings revealed TNF-α altered the membrane properties of rabbit hippocampal CA1 neurons, which was characterized by a decrease in after-hyperpolarization amplitudes; Field potential recordings showed TNF-α inhibited long-term potentiation but did not influence presynaptic function. Interestingly, TNF-α did not significantly affect the after-hyperpolarization amplitudes of hippocampal CA1 neurons from cholesterol fed rabbits compared to normal chow fed rabbits. In conclusion, dietary cholesterol generated an in vivo model of chronic TNF-α elevation and TNF-α may underlie the learning and memory changes previously seen in the rabbit model of AD by acting as a bridge between dietary cholesterol and brain function and directly modulating the electrophysiological properties of hippocampal CA1 neurons.