Major predictors of Alzheimer's disease (AD) include apolipoprotein E (APOE)-epsilon4, hippocampal atrophy on magnetic resonance imaging (MRI), and memory dysfunction prior to diagnosis. We examined 159 normal elderly subjects with MRI and the California Verbal Learning Test (CVLT); 84 returned for longitudinal follow-up 5 years later. Analyses at baseline revealed significant variance in hippocampal volume accounted for by cerebral volume and age but not by APOE isoform. However, interactions involving APOE isoform and laterality were observed. As hypothesized, an APOE x time interaction was revealed for CVLT long-delay free recall: APOE-epsilon3/4 subjects had significantly poorer performance than APOE-epsilon3/3 subjects at follow-up. Forward stepwise multiple regression analysis predicting follow-up long-delay free recall selected baseline recall, followed by number of APOE-epsilon4 alleles, followed by left-hippocampal volume. Age and sex did not enter into the model. We conclude that APOE-epsilon4 predicts longitudinal memory decline in healthy controls and that MRI morphometry of hippocampus adds slightly to predictive value.