The epsilon4 allele of apolipoprotein E (APOE) is the major genetic risk factor for Alzheimer's disease (AD). Although there have been numerous studies attempting to elucidate the underlying mechanism for this increased risk, how apoE4 influences AD onset and progression has yet to be proven. However, prevailing evidence suggests that the differential effects of apoE isoforms on Abeta aggregation and clearance play the major role in AD pathogenesis. Other potential mechanisms, such as the differential modulation of neurotoxicity and tau phosphorylation by apoE isoforms as well as its role in synaptic plasticity and neuroinflammation, have not been ruled out. Inconsistent results among studies have made it difficult to define whether the APOE epsilon4 allele represents a gain of toxic function, a loss of neuroprotective function, or both. Therapeutic strategies based on apoE propose to reduce the toxic effects of apoE4 or to restore the physiological, protective functions of apoE.