Apolipoprotein (apo) E is an exchangeable apolipoprotein that plays an integral role in cholesterol transport in the plasma and the brain. It is also associated with protein misfolding or amyloid proteopathy of the beta amyloid peptide (Abeta) in Alzheimer's disease (AD) and cerebral amyloid angiopathy. The C-terminal domain (CT) of apoE encompasses two types of amphipathic alpha helices: a class A helix (residues 216-266) and a class G* helix (residues 273-299). This domain also harbors high-affinity lipoprotein binding and apoE self-association sites that possibly overlap. The objective of this study is to examine if the neurotoxic oligomeric Abeta interacts with apoE CT and if this association affects the lipoprotein binding function of recombinant human apoE CT. Site-specific fluorescence labeling of single cysteine-containing apoE CT variants with donor probes were employed to identify the binding of Abeta bearing an acceptor probe by intermolecular fluorescence resonance energy-transfer analysis. A higher efficiency of energy transfer was noted with probes located in the class A helix than with those located in the class G* helix of apoE CT. In addition, incubation of apoE CT with Abeta severely impaired the lipid binding ability and the overall amount of lipid-associated apoE CT. However, when apoE CT is present in a lipid-bound state, Abeta appears to be localized within the lipid milieu of the lipoprotein particle and not associated with any specific segments of the protein. When our data are taken together, they suggest that Abeta association compromises the fundamental lipoprotein binding function of apoE, which may have implications not only in terms of amyloid buildup but also in terms of the accumulation of cholesterol at extracellular sites.