Apolipoprotein (apo) E4 is the major known genetic risk factor for Alzheimer's disease (AD). We have shown in vitro and in vivo that apoE4 preferentially undergoes aberrant cleavage in neurons, yielding neurotoxic C-terminal-truncated fragments. To study the effect of these fragments on amyloid-β (Aβ) clearance/deposition and their potential synergy with Aβ in eliciting neuronal and behavioral deficits, we cross-bred transgenic mice expressing apoE3, apoE4, or apoE4(Δ272-299) with mice expressing human amyloid protein precursor (APP) harboring familial AD mutations (hAPP(FAD)). At 6-8 mo of age, hAPP(FAD) mice expressing apoE3 or apoE4 had lower levels of hippocampal Aβ (94% and 89%, respectively) and less Aβ deposition (89% and 87%) than hAPP(FAD) mice without apoE, whereas hAPP(FAD) mice expressing mouse apoE had higher Aβ levels. Thus, human apoE stimulates Aβ clearance, but mouse apoE does not. Expression of apoE4(Δ272-299) reduced total Aβ levels by only 63% and Aβ deposition by 46% compared with hAPP(FAD) mice without apoE. Unlike apoE3 and apoE4, the C-terminal-truncated apoE4 bound poorly with Aβ peptides, leading to decreased Aβ clearance and increased Aβ deposition. Despite their lower levels of Aβ and Aβ deposition, hAPP(FAD)/apoE4(Δ272-299) mice accumulated pathogenic Aβ oligomers and displayed neuronal and behavioral deficits similar to or more severe than those in hAPP(FAD) mice. Thus, the C-terminal-truncated apoE4 fragment inefficiently clears Aβ peptides and acts in concert with low levels of Aβ to elicit neuronal and behavioral deficits in mice.