Insulin and cholesterol play important roles in basic metabolic processes in peripheral tissues. Both insulin and cholesterol can also act as signalling molecules in the central nervous system that participate in neuronal function, memory and neurodegenerative diseases. A high-cholesterol diet improves spatial memory in experimental animals. beta-Amyloid, the toxic peptide in neurons of AD (Alzheimer's disease) patients, binds cholesterol and catalyses its oxidation to 7beta-hydroxycholesterol, a highly toxic oxysterol that is a potent inhibitor of alpha-PKC (alpha-protein kinase C), an enzyme critical in memory consolidation and synaptic plasticity and implicated in AD. Oxidized cholesterol also can act as a second messenger for insulin. Oxidized low-density lipoprotein inhibits insulin-dependent phosphorylation of the signalling kinases ERK (extracellular-signal-regulated kinase) and PKB/Akt. In sporadic AD patients, insulin levels are decreased, suggesting links between AD and diabetes. Insulin signalling is also important in synaptic plasticity. Insulin receptors are up-regulated and undergo translocation after spatial learning. Insulin modulates the activity of excitatory and inhibitory receptors including the glutamate and gamma-aminobutyric acid receptors and activates two biochemical pathways: the shc-ras-mitogen-activated protein kinase pathway and the PI3K (phosphoinositide 3-kinase)/PKC pathway, both of which are involved in memory processing. These findings point to a convergence at the biochemical level between pathways involved in AD and those important for normal memory.