The strongest known genetic risk factor for the development of late-onset Alzheimer disease is inheritance of the apolipoprotein (apo) E4 (epsilon4 allele) although the mechanisms underlying this connection are still not entirely clear. In this review, we shall discuss the role of apo E in the brain, particularly in relation to Alzheimer disease. Cholesterol transport and homeostasis in the central nervous system (CNS) are separated from that in the peripheral circulation by the blood-brain barrier. However, the brain operates its own lipoprotein transport system that is mediated by high density lipoprotein-sized, apo E-containing lipoproteins that are synthesized and secreted by glial cells (primarily astrocytes). Several ATP-binding cassette (ABC) transporters are expressed in the brain, including ABCA1 and ABCG1 which play important roles in the transfer of phospholipids and cholesterol to apo E. The astrocyte-derived apo E-containing lipoproteins can bind to, and be internalized by, receptors of the low density lipoprotein receptor superfamily that are located on the surface of neurons. In addition to these receptors serving as endocytosis receptors for lipoproteins, several of these receptors also act as signaling receptors in neurons and activate pathways involved in axonal growth, as well as neuronal survival. These beneficial pathways appear to be enhanced to a greater extent by apo E3 than by apo E4. Apo E has also been implicated in the deposition of amyloid plaques since apo E3, more readily than apo E4, forms a complex with Ass peptides, and mediates the degradation of amyloid deposits.