It has been shown over the past few years that apolipoprotein E (apoE) plays a central role in the brain response to injury and neurodegeneration in mammalian species. The coordinated expression of apoE and its different receptors, the so-called LDL receptor family, appears to regulate the transport of cholesterol and phospholipids during the early and middle phases of the reinnervation in the adult mammalian brain. As neurons undergo dendritic remodelling and synaptogenesis using cholesterol internalization through the apoE/LDL receptor pathway, they progressively shut down 3,3-hydroxymethylglutaryl-Coenzyme A (HMG CoA) reductase activity, the rate-limiting enzyme in the synthesis of cholesterol. These results suggest that cholesterol delivery and synthesis in the brain are tightly regulated through an apoE-dependent mechanism. The discovery that the apolipoprotein e4 allele is strongly linked to both sporadic and familial late-onset Alzheimer's disease (AD) has raised the possibility that a dysfunction of lipid transport could explain the poor compensatory synaptogenesis reported by several independent research groups in the brain of AD subjects. Recently, it has been shown that alterations of cholesterol homeostasis in the brain by exogenous administration of dietary cholesterol, or through inhibition of cholesterol synthesis, markedly affect beta amyloid production (1-40 and 1-42) and deposition and significantly impair amyloid precursor protein (APP) metabolism. In vivo, it has been shown that breeding of APP-overexpressing mice with apoE knockout mice completely abolishes amyloid plaque deposition in the brain of hybrid animals, without affecting beta amyloid steady state levels. Conversely, introduction of the human apoE3 and apoE4 genes in APP-overexpressing mice drastically reduced beta amyloid deposition in the brain of hybrid mice, confirming the proposed biological role of apoE in the clearance of extracellular beta amyloid. These results indicate that lipid homeostasis is controlled in large part by the apoE lipoprotein transport system in the extracellular space, whereas alterations in intracellular lipid homeostasis markedly affect APP processing, beta amyloid production and plaque formation in vivo. The convergence of the so-called amyloid cascade hypothesis (Hardy et al., 1992) and of the apoE/lipid recycling cascade model (Poirier, 1994) is consistent with the notion that alterations in lipid homeostasis could serve as the common denominator for apoE and beta amyloid dysfunctions in Alzheimer's disease. It is also interesting to note that lipid homeostasis is also a central feature of one of the most important neurotransmitter systems in the brain: the cholinergic system. This system is unique in the CNS since it relies heavily on lipid bioavailability to locally synthesize acetylcholine. It is thus quite tempting to propose that two of the most common neuropathologic landmarks of AD--namely, cholinergic dysfunction and amyloid deposition--may in fact depend on the integrity of local lipid homeostatic processes, which in turn are strongly dependent upon proper lipid delivery by the apoE transport system.