Phospholipid transfer protein (PLTP), a main protein in lipid and lipoprotein metabolism, exists in high-activity (HA-PLTP) and low-activity (LA-PLTP) forms in human plasma. Proper phospholipid transfer activity of PLTP is modulated by interactions with various apolipoproteins (apo) including apoE. The domains of apoE involved in interactions with PLTP are not known. Here we analyzed the capacity of recombinant apoE isoforms and apoE4 mutants with progressive carboxyl-terminal deletions to bind to and activate HA-PLTP and LA-PLTP. Our analyses demonstrated that lipid-free apoE isoforms bind to both HA-PLTP and LA-PLTP, resulting in phospholipid transfer activation, with apoE3 inducing the highest PLTP activation. The isoform-specific differences in apoE/PLTP binding and PLTP activation were abolished following apoE lipidation. Lipid-free apoE4[Δ(260-299)], apoE4[Δ(230-299)], apoE4[Δ(203-299)], and apoE4[Δ(186-299)] activated HA-PLTP by 120-160% compared to full-length apoE4. Lipid-free apoE4[Δ(186-299)] also activated LA-PLTP by 85% compared to full-length apoE4. All lipidated truncated apoE4 forms displayed a similar effect on HA-PLTP and LA-PLTP activity as full-length apoE4. Strikingly, lipid-free or lipidated full-length apoE4 and apoE4[Δ(186-299)] demonstrated similar binding capacity to LA-PLTP and HA-PLTP. Biophysical studies showed that the carboxyl-terminal truncations of apoE4 resulted in small changes of the structural or thermodynamic properties of lipidated apoE4, that were much less pronounced compared to changes observed previously for lipid-free apoE4. Overall, our findings show an isoform-dependent binding to and activation of PLTP by lipid-free apoE. Furthermore, the domain of apoE4 required for PLTP activation resides within its amino-terminal 1-185 region. The apoE/PLTP interactions can be modulated by the conformation and lipidation state of apoE.