We assessed the isoform-specific effects of apolipoprotein (apo) E on the response of Neuro-2a cells to the amyloid beta peptide (Abeta1-42). As determined by the intracellular staining pattern and the release of beta-hexosaminidase into the cytosol, apoE4-transfected cells treated with aggregated Abeta1-42 showed a greater tendency toward lysosomal leakage than neo- or apoE3-transfected cells. Abeta1-42 caused significantly greater cell death and more than 2-fold greater DNA fragmentation in apoE4-secreting than in apoE3-secreting or control cells. H2O2 or staurosporine enhanced cell death and apoptosis in apoE4-transfected cells but not in apoE3-transfected cells. A caspase-9 inhibitor abolished the potentiation of Abeta1-42-induced apoptosis by apoE4. Similar results were obtained with conditioned medium from cells secreting apoE3 or apoE4. Cells preincubated for 4 h with a source of apoE3 or apoE4, followed by removal of apoE from the medium and from the cell surface, still exhibited the isoform-specific response to Abeta1-42, indicating that the potentiation of apoptosis required intracellular apoE, presumably in the endosomes or lysosomes. Studies of phospholipid (dimyristoylphosphatidylcholine) bilayer vesicles encapsulating 5-(and-6)-carboxyfluorescein dye showed that apoE4 remodeled and disrupted the phospholipid vesicles to a greater extent than apoE3 or apoE2. In response to Abeta1-42, vesicles containing apoE4 were disrupted to a greater extent than those containing apoE3. These findings are consistent with apoE4 forming a reactive molecular intermediate that avidly binds phospholipid and may insert into the lysosomal membrane, destabilizing it and causing lysosomal leakage and apoptosis in response to Abeta1-42.