Alzheimer's disease (AD) is characterized by impaired clearance of amyloid beta (Aβ) peptides, leading to the accumulation of Aβ in the brain and subsequent neurodegeneration and cognitive impairment. ApoE plays a critical role in the proteolytic degradation of soluble forms of Aβ. This effect is dependent upon lipidation of ApoE by ABCA1-mediated transfer of phospholipids and cholesterol. ApoE and ABCA1 are induced by the action of the RXR agonist, bexarotene. We have previously shown that bexarotene reduces Aβ levels in AD mouse models and we have hypothesized that this effect requires ABCA1-mediated lipidation of ApoE. To test this hypothesis, we crossed ABCA1-deficient (ABCA1 KO) mice with the APP/PS1 model of AD. Aged ABCA1 WT and ABCA1 KO APP/PS1 mice were treated for 7 days with vehicle or bexarotene (100 mg/kg/day). Bexarotene reduced levels of soluble Aβ 1-40 and 1-42 in the hippocampus of ABCA1 WT but not ABCA1 KO APP/PS1 mice. In contrast, insoluble levels of Aβ, and plaque loads were unaffected by bexarotene in this study. ABCA1 KO mice had increased levels of inflammation compared with ABCA1 WT mice. Bexarotene also increased most inflammatory gene markers evaluated. The effect of bexarotene on microglial inflammatory profiles, however, was independent of ABCA1 genotype. Importantly, bexarotene ameliorated deficits in novel object recognition in ABCA1 WT but not ABCA1 KO APP/PS1 mice. These data indicate that ABCA1-induced lipidation of ApoE is necessary for the ability of bexarotene to clear hippocampal soluble Aβ and ameliorate cognitive deficits.