Cognitive decline and dementia are key features of Alzheimer's disease (AD) that result from failure of neuronal function. Affected neurons demonstrate indices of nitrosative stress resulting from changes in nitric oxide (NO) mediated redox balance. Neurofibrillary tangles, a characteristic neuropathologic feature of AD, and dysfunctional neurons frequently display 3-nitrotyrosine or other markers of nitrosative stress and immunoreactive nitric oxide synthase (NOS), suggesting that NOS-containing neurons are affected in AD. Our previous studies showed that apolipoprotein E treatment of macrophages increased NO production. Using transgenic mouse models expressing human apoE2, apoE3, or apoE4 protein isoforms and no mouse apoE, we now report an isoform specific difference in microglial NO production. Mice expressing the apoE4 protein isoform have a greater NO production than mice expressing the apoE3 protein isoform. The supply of arginine, the sole substrate for NOS, is dependent on cationic amino acid transporters (CATs) that also demonstrate a similar pattern of apoE isoform dependency. Although arginine transport is greater in APOE4 microglia, this effect is not limited to tissue macrophages. Cortical neurons in primary culture from APOE4 transgenic mice exhibit a similar increase in arginine uptake over neurons cultured from APOE3 mice. The inappropriate levels of arginine transport and of NO in the presence of the APOE4 compared to the APOE3 gene and its products are likely to have significant impact in the CNS.