The beta-amyloid peptide (A beta) is widely considered to be the molecule that causes Alzheimer's disease (AD). Besides this pathological function of A beta, recently published data reveal that A beta also has an essential physiological role in lipid homeostasis. Cholesterol increases A beta production, and conversely A beta production causes a decrease in cholesterol synthesis. The latter appears to be mediated by the inhibition of 3-hydroxy-3-methylglutaryl-coenzyme A reductase (HMGR), a key enzyme in cholesterol synthesis, in an action similar to that of statins. Moreover, A beta regulates sphingolipid metabolism by directly activating sphingomyelinases (SMases). This review summarizes the molecular basis for the known physiological functions of A beta and amyloid precursor protein (APP), the roles of A beta and APP in lipid homeostasis and the medical implications of addressing lipid homeostasis in respect to AD. This knowledge might provide new insights for current and future therapeutic approaches to AD.