Herein we review the role of apolipoprotein E (ApoE) in Alzheimer's disease (AD) and how ApoE interacts with various risk factors. ApoE is localized with the major pathological hallmarks of AD, extracellular amyloid deposits and intracellular neurofibrillary tangles. The ApoE4 allele is associated with the development of late-onset familial and sporadic AD. ApoE4 has a gene dose effect on the risk and age of onset of AD. ApoE mRNA and protein are found predominantly in astrocytes within the CNS. There is also a high expression of ApoE mRNA in the brains of people with sporadic AD. ApoE acts as a cholesterol transporter in the brain. Cholesterol controls amyloid production and deposition by regulating beta-secretase. In transgenic animal studies, ApoE4 expression causes neuropathology and behavioral deficits. We also discuss data from three different cohorts for AD in the general population, in different racial and ethnic groups and the role of the 4 allele in the clinical onset of the disease. Although the 4 allele is an important genetic risk factor for AD, it accounts for a fairly small fraction of disease in the population. The effect of the 4 allele on annual decline in episodic memory is significantly stronger than its effect on decline in other cognitive systems. Notably, the 2 allele has an equal and opposite effect. Thus, ApoE allele status influences risk of AD by a relatively selective effect on episodic memory. Mechanistically, the role of APoE in AD needs to be established in terms of its gene expression, which ultimately controls levels of various ApoE isoforms. Transcriptional regulation suggests complex regulation of this gene and the resultant ApoE protein in injured neurons. We discuss the characteristics of ApoE regulatory elements, including their interactions with different transcription factors, to understand ApoE gene expression. Thus, ApoE4 contributes to the pathogenesis of AD, but additional environmental risk factors will also be identified independent of ApoE and other genetic polymorphisms.