Cerebral elevation of 42-residue amyloid β-peptide (Aβ42) triggers neuronal dysfunction in Alzheimer's disease (AD). Even though a number of cholesterol modulating agents have been shown to affect Aβ generation, the role of cholesterol in the pathogenesis of AD is not clear yet. Recently, we have shown that increased membrane cholesterol levels downregulates phosphatidylinositol 4,5-bisphosphate (PIP2) via activation of phospholipase C (PLC). In this study, we tested whether membrane cholesterol levels may affect the Aβ42 production via changing PIP2 levels. Increasing membrane cholesterol levels decreased PIP2 and increased secreted Aβ42. Supplying PIP2, by using a PIP2-carrier system, blocked the effect of cholesterol on Aβ42. We also found that cholesterol increased the expressions of β1 and β3 PLC isoforms (PLCβ1, PLCβ3). Silencing the expression of PLCβ1 prevented the effects of cholesterol on PIP2 levels as well as on Aβ42 production, suggesting that increased membrane cholesterol levels increased secreted Aβ42 by downregulating PIP2 via enhancing the expression of PLCβ1. Thus, cholesterol metabolism may be linked to Aβ42 levels via PLCβ1 expression and subsequent changes in PIP2 metabolism.