Although apolipoprotein E (apoE) is the most common genetic risk factor for Alzheimer's Disease (AD), how apoE participates in AD pathogenesis remains incompletely understood. ApoE is also the major carrier of lipids in the brain. Here, we review studies showing that the lipidation status of apoE influences the metabolism of Abeta peptides, which accumulate as amyloid deposits in the neural parenchyma and cerebrovasculature. One effect of apoE is to inhibit the transport of Abeta across the blood-brain-barrier (BBB), particularly when apoE is lipidated. A second effect is to facilitate the proteolytic degradation of Abeta by neprilysin and insulin degrading enzyme (IDE), which is enhanced when apoE is lipidated. We also describe how apoE becomes lipidated and how this impacts Abeta metabolism. Specifically, genetic loss of the cholesterol transporter ABCA1 impairs apoE lipidation and promotes amyloid deposition in AD mouse models. ABCA1 catalyses the ATP-dependent transport of cholesterol and phospholipids from the plasma membrane to lipid-free apolipoproteins including apoE. Conversely, selective overexpression of ABCA1 increases apoE lipidation in the central nervous system (CNS) and eliminates the formation of amyloid plaques in vivo. Deficiency of Liver-X-Receptors (LXRs), transcription factors that stimulate ABCA1 and apoE expression, exacerbates AD pathogenesis in vivo, whereas treatment of AD mice with synthetic LXR agonists reduces amyloid load and improves cognitive performance. These studies provide new insights into the mechanisms by which apoE affects Abeta metabolism, and offer opportunities to develop novel therapeutic approaches to reduce the leading cause of dementia in the elderly.