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The two genetic polymorphisms, rs7412 and rs429358, that collectively form the ℇ2, &epsive;3, and ℇ4 alleles of apolipoprotein E (APOE) are among the most widely studied sequence variants in the genome. The predominant model for testing APOE involves the haplotype combinations of ℇ2, ℇ3, and ℇ4 and has been basis of associations with dementia, atherosclerosis, and serum lipid levels. Here, we demonstrate the functional independence of these two component sites, with rs7412 contributing to the majority of variance in serum LDL (p=10-20), whereas rs429358 alone influences variance in CSF amyloid-β42 (Aβ42) (p=10-17). This latter relationship is also reflected in the association of APOE with dementia, where rs429358 strongly influences disease (p=10-67), but rs7412 does not. Models based upon ℇ2, ℇ3, and ℇ4 explained less variance for both dementia risk and CSF Aβ42 than did rs429358 alone. When adjusted for CSF Aβ42, the association of rs429358 with dementia is greatly reduced but remains significant indicating that APOE polymorphism influences disease by additional mechanisms distinct from Aβ42 metabolism. We reach four principal conclusion from this study: 1) rs429358 alone is responsible for the association of APOE with dementia; 2) The association of APOE with dementia is substantially mediated by its effect on CNS Aβ42 levels; 3) The association of APOE with dementia is not mediated by its impact on peripheral lipid metabolism; and 4) The dichotomy of effects of rs429358 and rs7412 represents one of the best examples of genetic pleiotropy for complex traits known and illustrates the importance of allelic heterogeneity in APOE. [ABSTRACT FROM AUTHOR]