Apolipoprotein (apo) E is thought to undergo conformational changes in the N-terminal helix bundle domain upon lipid binding, modulating its receptor binding activity. In this study, site-specific fluorescence labeling of the N-terminal (S94) and C-terminal (W264 or S290) helices in apoE4 by pyrene maleimide or acrylodan was employed to probe the conformational organization and lipid binding behavior of the N- and C-terminal domains. Guanidine denaturation experiments monitored by acrylodan fluorescence demonstrated the less organized, more solvent-exposed structure of the C-terminal helices compared to the N-terminal helix bundle. Pyrene excimer fluorescence together with gel filtration chromatography indicated that there are extensive intermolecular helix-helix contacts through the C-terminal helices of apoE4. Comparison of increases in pyrene fluorescence upon binding of pyrene-labeled apoE4 to egg phosphatidylcholine small unilamellar vesicles suggests a two-step lipid-binding process; apoE4 initially binds to a lipid surface through the C-terminal helices followed by the slower conformational reorganization of the N-terminal helix bundle domain. Consistent with this, fluorescence resonance energy transfer measurements from Trp residues to acrylodan attached at position 94 demonstrated that upon binding to the lipid surface, opening of the N-terminal helix bundle occurs at the same rate as the increase in pyrene fluorescence of the N-terminal domain. Such a two-step mechanism of lipid binding of apoE4 is likely to apply to mostly phospholipid-covered lipoproteins such as VLDL. However, monitoring pyrene fluorescence upon binding to HDL(3) suggests that not only apoE-lipid interactions but also protein-protein interactions are important for apoE4 binding to HDL(3).