The role of cholesterol in the etiology of Alzheimer's disease (AD) is still controversial. Some studies exploring the association between lipids and/or lipid lowering treatment and AD indicate a harmful effect of dyslipidemia and a beneficial effect of statin therapy on AD risk. The findings are supported by genetic linkage and association studies that have clearly identified several genes involved in cholesterol metabolism or transport as AD susceptibility genes, including apolipoprotein E, apolipoprotein J, and the sortilin-related receptor. Functional cell biology studies support a critical involvement of lipid raft cholesterol in the modulation of amyloid-β protein precursor (AβPP) processing by β- and γ-secretase resulting in altered amyloid-β production. Contradictory evidence comes from epidemiological studies showing no or controversial association between dyslipidemia and AD risk. Additionally, cell biology studies suggest that there is little exchange between circulating and brain cholesterol, that increased membrane cholesterol is protective by inhibiting loss of membrane integrity through amyloid cytotoxicity, and that cellular cholesterol inhibits co-localization of BACE1 and AβPP in non-raft membrane domains, thereby increasing generation of plasmin, an amyloid-β-degrading enzyme. The aim of this review is to summarize the findings of epidemiological and cell biological studies to elucidate the role of cholesterol in AD etiology.