Alzheimer’s disease (AD) is the most common form of dementia and is characterised by the accumulation of amyloid-β (Aβ) and tau protein in the brain tissue of affected individuals. However, the initial molecular events that lead to the development of AD are still unknown. The deposition of Aβ has led to the hypothesis that the disease is initiated by Aβ accumulation while studies of the genetic risk factors suggest that inflammation might be critically important in disease pathogenesis. However, the relationship between these key events – the deposition of Aβ in the brain and neuroinflammation - is still not well characterised. We investigated the relationship between neuroinflammation and protein aggregation using highly sensitive single-molecule techniques and human neurons derived from induced pluripotent stem cells. The differentiated cells were incubated with the proinflammatory cytokine TNFα while the arising proteotoxic environment was monitored using various techniques, including aggregate-specific super-resolution imaging and an assay quantifying the ability of the aggregates to permeabilise lipid membranes. Here we show that physiological levels of TNFα can drive oligomer production over time in neurons derived from human stem cells. Neurons with APP mutations produce significantly higher levels of oligomers than isogenic controls. The oligomers formed in neuronal cells of AD also show a greater propensity to permeabilise lipid membranes, suggesting mechanisms for the observed proteotoxicity in AD. Our work suggests that neuroinflammation and protein aggregation are closely linked and may occur together in a positive-feedback loop during AD. Therapeutic strategies to break this cycle may need to target both neuroinflammation and protein aggregation together.