The effects of dietary cholesterol on brain amyloid precursor protein (APP) processing were examined using an APP gene-targeted mouse, genetically humanized in the amyloid beta-peptide (Abeta) domain and expressing the Swedish familial Alzheimer's disease mutations. These mice express endogenous levels of APP holoprotein and abundant human Abeta. Increased dietary cholesterol led to significant reductions in brain levels of secreted APP derivatives, including sAPPalpha, sAPPbeta, Abeta1-40, and Abeta1-42, while having little to no effect on cell-associated species, including full-length APP and the COOH-terminal APP processing derivatives. The changes in levels of sAPP and Abeta in brain all were negatively correlated with serum cholesterol levels and levels of serum and brain apoE. These results demonstrate that secreted APP processing derivatives and Abeta can be modulated in the brain of an animal by diet and provide evidence that cholesterol plays a role in the modulation of APP processing in vivo. APP gene-targeted mice lacking apoE, also have high serum cholesterol levels but do not show alterations in APP processing, suggesting that effects of cholesterol on APP processing require the presence of apoE.