β-Amyloid peptide (Aβ) is a potent neurotoxic protein associated with Alzheimer’s disease (AD) which causes oxidative damage to neurons. Incensole acetate (IA) is a major constituent of Boswellia carterii resin, which has anti-inflammatory and protective properties against damage of a large verity of neural subtypes. However, this neuroprotective effect was not studied on human olfactory bulb neural stem cells (hOBNSCs). Herein, we evaluated this effect and studied the underlying mechanisms. Exposure to Aβ_25–35 (5 and 10 μM for 24 h) inhibited proliferation (revealed by downregulation of Nestin and Sox2 gene expression), and induced differentiation (marked by increased expression of the immature neuronal marker Map2 and the astrocyte marker Gfap) of hOBNSCs. However, pre-treatment with IA (100 μM for 4 h) stimulated proliferation and differentiation of neuronal, rather than astrocyte, markers. Moreover, IA pretreatment significantly decreased the Aβ_25–35-induced viability loss, apoptotic rate (revealed by decreased caspase 3 activity and protein expression, downregulated expression of Bax, caspase 8, cyto c, caspase3, and upregulated expression of Bcl2 mRNAs and proteins, in addition to elevated mitochondrial membrane potential and lowered intracellular Ca⁺²). IA reduced Aβ-mediated ROS production (revealed by decreased intracellular ROS and MDA level, and increased SOD, CAT, and GPX contents), and inhibited Aβ-induced inflammation (marked by down-regulated expression of IL1b, TNFa, NfKb, and Cox2 genes). IA also significantly upregulated mRNA and protein expression of Erk1/2 and Nrf2. Notably, IA increased the antioxidant enzyme heme oxygenase-1 (HO-1) expression and this effect was reversed by HO-1 inhibitor zinc protoporphyrin (ZnPP) leading to reduction of the neuroprotective effect of IA against Aβ-induced neurotoxicity. These findings clearly show the ability of IA to initiate proliferation and differentiation of neuronal progenitors in hOBNSCs and induce HO-1 expression, thereby protecting the hOBNSCs cells from Aβ_25–35-induced oxidative cell death. Thus, IA may be applicable as a potential preventive agent for AD by its effect on hOBNSCs and could also be used as an adjuvant to hOBNSCs in cellular therapy of neurodegenerative diseases.