Inheritance of apolipoprotein E4 (APOE4) is a major risk factor for development of Alzheimer's disease (AD). This lipoprotein, in contrast to apoE2, has arginine residues at positions 112 and 158 in place of cysteines in the latter isoform. In apoE3, the Cys at residue 158 is replaced by an arginine residue. This differential amino acid composition of the three genotypes of APOE have profound influence on the structure, binding properties, and multiple functions of this lipoprotein. Moreover, AD brain is under a high degree of oxidative stress, including that associated with amyloid β-peptide (Aβ) oligomers. Lipid peroxidation produces the highly reactive and neurotoxic molecule, 4-hydroxynonenal (HNE) that forms covalent bonds with cysteine residues (Cys) [as well as with Lys and His residues]. Covalently modified Cys significantly alter structure and function of modified proteins. HNE bound to Cys residue(s) on apoE2 and apoE3 lessens the chance of HNE damage other proteins. apoE4, lacking Cys residues, is unable to scavenge HNE, permitting this latter neurotoxic molecule to lead to oxidative modification of neuronal proteins and eventual cell death. We posit that this lack of HNE scavenging activity in apoE4 significantly contributes to the association of APOE4 inheritance and increased risk of developing AD. Apoe knock-out mice provide insights into the role of this lipoprotein in oxidative stress. Targeted replacement mice in which the mouse gene of Apoe is separately replaced by the human APOE2, APOE3, or APOE4 genes, while keeping the mouse promoter assures the correct location and amount of the human protein isoform. Human APOE targeted replacement mice have been used to investigate the notion that oxidative damage to and death of neurons in AD and its earlier stages is related to APOE genotype. This current paper reviews the intersection of human APOE genotype, oxidative stress, and diminished function of this lipoprotein as a major contributing risk factor for development of AD. Discussion of potential therapeutic strategies to mitigate against the elevated risk of developing AD with inheritance of the APOE4 allele also is presented.