The pathological role of ApoE4 in Alzheimer's disease (AD) is not fully elucidated yet but there is strong evidence that ApoE is involved in Abeta deposition, which is an early hallmark of AD neuropathology. Overexpression of ApoE in neuroblastoma cells (Neuro2a) leads to the generation of an intracellular 13 kDa carboxy-terminal fragment of ApoE comparable to fragments seen in brains of AD patients. ApoE4 generates more of this fragment than ApoE2 and E3 suggesting a potential pathological role of these fragments in Alzheimer's disease. Analysis of this intracellular ApoE4 fragment by protease digest followed by MALDI-TOF mass spectrometry showed the proteolytic cleavage site close to residue 187 of ApoE. We have engineered and expressed the corresponding ApoE fragments in vitro. The recombinant 13 kDa carboxy-terminal fragment inhibited fibril formation of Abeta; this contrasts with the full-length ApoE and the corresponding amino-terminal ApoE fragment. Moreover, we show that the 13 kDa carboxy-terminal fragment of ApoE stabilizes the formation of Abeta hexamers. Complexes of Abeta with the 13 kDa carboxy-terminal ApoE fragment show toxicity in PC12 cells comparable to Abeta fibrils. These data suggest that cleavage of ApoE, leading to the generation of this fragment, contributes to the pathogenic effect of ApoE4 in AD.