Apolipoprotein E (ApoE) 4 is a potent risk factor for Alzheimer's disease (AD). However, the mechanism underlying ApoE4 function in the pathology of AD is not well understood. We report here that, in comparison with ApoE2 and ApoE3, ApoE4 significantly reduces levels of insulin-degrading enzyme (IDE), which is responsible for the cellular clearance of Abeta in neurons. This differential regulation of IDE by various ApoE isoforms was blocked by coincubation with N-methyl-d-aspartic acid (NMDA) receptor inhibitors and receptor-associated protein (RAP), which blocked the interaction between ApoE and members of the low-density lipoprotein (LDL) receptor family. Moreover, inhibition of the NMDA receptor increased IDE levels in neurons, while activation of the NMDA receptor-reduced IDE expression. Further studies demonstrate that, as a pathway downstream of the NMDA receptor, cAMP-dependent protein kinase (PKA) contributes to the NMDA receptor-reduced IDE expression. These results suggest that ApoE4 down-regulates IDE expression in neurons by binding to its receptor and stimulating the NMDA receptor pathway, which may account for its role in AD pathogenesis.