Apolipoprotein-E protein is an endogenous immunomodulatory agent that affects both the innate and the adaptive immune responses. Since individuals with the APOE4 gene demonstrate worsened pathology and poorer outcomes in many neurological disorders, we examined isoform-specific differences in the response of microglia, the primary cellular component of the brain's innate immune response, in detail. Our data demonstrate that microglia derived from APOE4/4 targeted replacement mice demonstrate a pro-inflammatory phenotype that includes altered cell morphology, increased NO production associated with increased NOS2 mRNA levels, and higher pro-inflammatory cytokine production (TNFalpha, IL-6, IL12p40) compared to microglia derived from APOE3/3 targeted replacement mice. The effect is gene dose-dependent and increases with the number of APOE4 gene alleles. The APOE genotype-specific immune profile observed in the microglial immune response is also observed in the cortex of aged APOE3/3 and APOE4/4 mice treated with lipopolysacchride (LPS) and in peripheral (peritoneal) macrophages. To determine if APOE4's action resulted from an isoform-specific difference in effective levels of the apolipoproteins, we generated mice expressing only a single allele of APOE3. Immune-stimulated macrophages from APOE3/0 mice demonstrated an increased inflammatory response compared to APOE3/3 mice, but less than in APOE4/4 mice. These data suggest that inhibition of inflammation depends upon the dose of apoE3 protein available and that apoE4 protein may alter inflammation partly by dose effects and partly by being qualitatively different than apoE3. Overall, these data emphasize the important role of apolipoprotein E and of the APOE genotype on the immune responses that are evident in most, if not all, neurological disease.