Several lines of evidence suggest that dysregulated lipid metabolism may participate in the pathogenesis of Alzheimer's disease (AD). Epidemiologic studies suggest that elevated mid-life plasma cholesterol levels may be associated with an increased risk of AD and that statin use may reduce the prevalence of AD. Cellular studies have shown that the levels and distribution of intracellular cholesterol markedly affect the processing of amyloid precursor protein into A beta peptides, which are the toxic species that accumulate as amyloid plaques in the AD brain. Most importantly, genetic evidence identifies apolipoprotein E, the major cholesterol carrier in the central nervous system, as the primary genetic risk factor for sporadic AD. In humans, apoE exists as three major alleles (apoE2, apoE3, and apoE4), and inheritance of the apoE4 allele increases the risk of developing AD at an earlier age. However, exactly how apoE functions in the pathogenesis of AD remains to be fully determined. Our studies have identified that the cholesterol transporter ABCA1 is a crucial regulator of apoE levels and lipidation in the brain. Deficiency of ABCA1 leads to the loss of approximately 80% of apoE in the brain, and the residual 20% that remains is poorly lipidated. Several independent studies have shown this poorly lipidated apoE increases amyloid burden in mouse models of AD, demonstrating that apoE lipidation by ABCA1 affects key steps in amyloid deposition or clearance. Conversely, robust overexpression of ABCA1 in the brain promotes apoE lipidation and nearly eliminates the formation of mature amyloid plaques. These studies show that the lipid binding capacity of apoE is a major mechanism of its function in the pathogenesis of AD, and suggest that increasing apoE lipidation may be of therapeutic importance for this devastating disease.