High levels of cholesterol have been proposed as a risk factor for Alzheimer's disease (AD). Polymorphism of genes encoding proteins that regulate cholesterol metabolism have also been associated with the frequency of Alzheimer's development. Some studies have shown that cholesterol-lowering drugs reduce the frequency of AD development. The proposed role of cholesterol in AD has been challenged by several studies. In this review, we provide a brief account of the major pieces of evidence in support of and against the possible role of cholesterol in the development of AD, and the methodologies used. We highlight the interactions between cholesterol and amyloid beta (Abeta) and, with the peptide's precursor protein. Drawing from our teams' recent findings, we speculate on how Abeta peptides may influence the fluidity, stability of the membrane, as well as membrane morphological changes.