Polymorphism in the apolipoprotein E (APOE) gene is a major genetic risk determinant of late-onset Alzheimer disease (AD), with the APOE*ε4 allele conferring an increased risk and the APOE*ε2 allele conferring a decreased risk relative to the common APOE*ε3 allele. Strong evidence from clinical and basic research suggests that a major pathway by which APOE4 increases the risk of AD is by driving earlier and more abundant amyloid pathology in the brains of APOE*ε4 carriers. The number of amyloid-β (Aβ)-dependent and Aβ-independent pathways that are known to be differentially modulated by APOE isoforms is increasing. For example, evidence is accumulating that APOE influences tau pathology, tau-mediated neurodegeneration and microglial responses to AD-related pathologies. In addition, APOE4 is either pathogenic or shows reduced efficiency in multiple brain homeostatic pathways, including lipid transport, synaptic integrity and plasticity, glucose metabolism and cerebrovascular function. Here, we review the recent progress in clinical and basic research into the role of APOE in AD pathogenesis. We also discuss how APOE can be targeted for AD therapy using a precision medicine approach.