Epidemiological studies have demonstrated that hypercholsterolemia is a significant risk factor for Alzheimer's disease (AD). The mechanism by which increased cholesterol may contribute to AD is unknown. However, as the generation and accumulation of the amyloid Aβ peptide in the brain appears to be significant for the initiation and progression of AD, it is possible that cholesterol levels can regulate Aβ formation and/or clearance. To test the effects of altering cholesterol on Aβ formation, we incubated cells in the presence of lipid depleted serum, with or without the active metabolite of the HMG-CoA reductase inhibitor lovastatin. After confirming that cholesterol was depleted in the cells, we then measured the fraction of Aβ formed from its precursor AβPP under each condition, We observed that cholesterol depletion led to a profound decrease in the levels of Aβ released from the cells. This effect of lovastatin acid was observed at concentrations of 0.05-5 μM, ranges where this compound is effective at inhibiting HMG-CoA reductase, thereby inhibiting cholesterol synthesis, In contrast, the release of an additional AβPP fragment, AβPPs, was only modestly reduced by cholesterol treatment. In further studies, we determined that the decreased release of Aβ was not due to its accumulation in the cell, but rather due to decreased formation of Aβ. Finally, we were able to exclude decreased maturation (glycosylation and sulfation) of newly synthesized AβPP as a cause for the effects of lovastatin acid on AβPP processing and Aβ formation. Our results demonstrate that reducing cellular cholesterol by the use of an HMG-CoA reductase inhibitor regulates Aβ formation. This effect may involve alterations in the trafficking of AβPP and/or alterations in the activity of the proteases that cleave AβPP. The results suggest a mechanism by which hypercholesterolemia may increase risk for AD and indicate that reduction in cholesterol may delay the onset and/or slow the progression of AD.