Apolipoprotein (apo) E2 is often associated with low levels of low density lipoprotein (LDL) cholesterol and high levels of plasma triglycerides in humans. Mice expressing apoE2 also have low LDL levels. To evaluate the possible role of the LDL receptor in the cholesterol-lowering effect of apoE2, we bred transgenic mice expressing low levels of apoE2 with LDL receptor-null mice (hE2(+/0), LDLR-/-). Even in the absence of the LDL receptor, plasma total and LDL cholesterol levels decreased progressively with increasing levels of plasma apoE2. At plasma apoE2 levels >20 mg/dl, LDL cholesterol was approximately 45% lower than in LDLR-/- mice. Thus, the LDL cholesterol-lowering effect of apoE2 is independent of the LDL receptor. In contrast, plasma triglyceride levels increased (mostly in very low density lipoproteins (VLDL) and intermediate density lipoproteins (IDL)) progressively as apoE2 levels increased. At plasma apoE2 levels >20 mg/dl, triglycerides were approximately 150% higher than in LDLR-/- mice. Furthermore, in apoE-null mice (hE2(+/0), mE-/-), apoE2 levels also correlated positively with plasma triglyceride levels, suggesting impaired lipolysis in both hE2(+/0),LDLR-/- and hE2(+/0),mE-/- mice. Incubating VLDL or IDL from the hE2(+/0),LDLR-/- or the hE2(+/0),mE-/- mice with mouse postheparin plasma inhibited lipoprotein lipase-mediated lipolysis of apoE2-containing VLDL and IDL by approximately 80 and approximately 70%, respectively, versus normal VLDL and IDL. This observation was confirmed by studies with triglyceride-rich emulsion particles, apoE2, and purified lipoprotein lipase. Furthermore, apoE2-containing VLDL had much less apoC-II than normal VLDL. Adding apoC-II to the incubation partially corrected the apoE2-impaired lipolysis in apoE2-containing VLDL or IDL and corrected it completely in apoE2-containing emulsion particles. Thus, apoE2 lowers LDL cholesterol by impairing lipoprotein lipase-mediated lipolysis of triglyceride-rich lipoproteins (mostly by displacing or masking apoC-II). Furthermore, the effects of apoE2 on both plasma cholesterol and triglyceride levels are dose dependent and act via different mechanisms. The increase in plasma cholesterol caused by apoE2 is due mostly to impaired clearance, whereas the increase in plasma triglycerides is caused mainly by apoE2-impaired lipolysis of triglyceride-rich lipoproteins.