Mutations in the amyloid precursor protein (APP) cause early-onset Alzheimer's disease (AD), but the only genetic risk factor for late-onset AD is the ɛ4 allele of apolipoprotein E (apoE), a major cholesterol carrier. Using Cre-lox conditional knockout mice, we demonstrate that lipoprotein receptor LRP1 expression regulates apoE and cholesterol levels within the CNS. We also found that deletion of APP and its homolog APLP2, or components of the γ-secretase complex, significantly enhanced the expression and function of LRP1, which was reversed by forced expression of the APP intracellular domain (AICD). We further show that AICD, together with Fe65 and Tip60, interacts with the LRP1 promoter and suppresses its transcription. Together, our findings support that the γ-secretase cleavage of APP plays a central role in regulating apoE and cholesterol metabolism in the CNS via LRP1 and establish a biological linkage between APP and apoE, the two major genetic determinants of AD.