The three common alleles at the APOE locus influence the onset and lifetime risk of typical late-onset Alzheimer's disease (AD). Other loci may also alter risk of late-onset AD. One may assess the relative influence of APOE on the genetic contribution to AD by estimating the proportion of AD heritability that is explained by APOE polymorphism. To do this requires an initial estimate of the heritability of AD. Traditional methods are not appropriate for this estimation since they do not consider right-censoring (incomplete expression of the genotype owing to death) nor do they model the relation of onset age and disease liability. Here we present an analytic model that addresses both of these issues. Genetic and environmental influences on AD are examined by assuming that onset of dementia in AD is a late event in an extended degenerative process where earlier onset reflects a more rapid course of neurodegeneration. The model is fitted to the occurrence of AD among 9,786 members of the National Academy of Sciences-National Research Council Registry of aging veteran twins. When both additive genetic and common environmental effects are used in the model, they explain 37% and 35%, respectively, of the variation in AD onset. Given the limited numbers of AD cases now available, models containing only additive genetic or shared environmental effects (explaining 75% and 65% of individual differences in disease onset, respectively) cannot be rejected in favor of a model that retains both influences.