Deposition of amyloid-β (Aβ) in Alzheimer's disease (AD) is strongly correlated with the APOE genotype. However, the role of apolipoprotein E (apoE) in Aβ aggregation has remained unclear. Here we have used different apoE preparations, such as recombinant protein or protein isolated from cultured astrocytes, to examine the effect of apoE on the aggregation of both Aβ1-40 and Aβ1-42. The kinetics of aggregation, measured by the loss of fluorescence of tetramethylrhodamine-labeled Aβ, is shown to be dramatically slowed by the presence of substoichiometric concentrations of apoE. Using these concentrations, we conclude that apoE binds primarily to and affects the growth of oligomers that lead to the nuclei required for fibril growth. At higher apoE concentrations, the protein also binds to Aβ fibrils, resulting in fibril stabilization and a slower rate of fibril growth. The aggregation of Aβ1-40 is dependent on the apoE isoform, being the most dramatic for apoE4 and less so for apoE3 and apoE2. Our results indicate that the detrimental role of apoE4 in AD could be related to apoE-induced stabilization of the soluble but cytotoxic oligomeric forms and intermediates of Aβ, as well as fibril stabilization.