There are three isoforms of the 33-kDa protein apolipoprotein E (apoE), termed apoE2, apoE3, and apoE4, each encoded by distinct genes APOE2, APOE3 and APOE4, respectively. In 1993, the APOE genotype was identified as a risk factor for Alzheimer's disease (AD) and was subsequently acknowledged to account for approximately 60% of all cases. The influence of the APOE genotype in AD is clearly isoform dependent, APOE4 imparting susceptibility and APOE2 protection. Thus, patients homozygous for the E4 allele show a very strong likelihood of developing the disease by age 75, whereas patients carrying at least one E2 allele are unlikely to develop symptoms of AD by this age. A major issue in AD research is therefore to understand the functional differences between the ApoE isoforms, with the ultimate aim of designing the next generation of drugs to treat this disease. The purpose of the present article is to summarise some of this work. This review encompasses the rapidly developing molecular, cellular and behavioural research into ApoE, and attempts to highlight those findings we consider to be of particular significance.