The ATP-binding cassette transporter A1 (ABCA1) is a major regulator of peripheral cholesterol efflux and plasma high density lipoprotein metabolism. In adult rat brain we found high expression of ABCA1 in neurons in the hypothalamus, thalamus, amygdala, cholinergic basal forebrain, and hippocampus. Large neurons of the cholinergic nucleus basalis together with CA1 and CA3 pyramidal neurons were among the most abundantly immunolabeled neurons. Glia cells were largely negative. Because cholesterol homeostasis may have an essential role in central nervous system function and neurodegeneration, we examined ABCA1 expression and function in different brain cell types using cultures of primary neurons, astrocytes, and microglia isolated from embryonic rat brain. The basal ABCA1 mRNA and protein levels detected in these cell types were increased markedly after exposure to oxysterols and 9-cis-retinoic acid, which are ligands for the nuclear hormone liver X receptors and retinoic X receptors, respectively. Functionally, the increased ABCA1 expression caused by these ligands was followed by elevated apoA-I- and apoE-specific cholesterol efflux in neurons and glia. In non-neuronal and neuronal cells overexpressing a human Swedish variant of amyloid precursor protein, 22R-hydroxycholesterol and 9-cis-retinoic acid induced ABCA1 expression and increased apoA-I-mediated cholesterol efflux consequently decreasing cellular cholesterol content. More importantly, we demonstrated that these ligands alone or in combination with apoA-I caused a substantial reduction in the stability of amyloid precursor protein C-terminal fragments and decreased amyloid beta production. These effects of 22R-hydroxycholesterol may provide a novel strategy to decrease amyloid beta secretion and consequently reduce the amyloid burden in the brain.