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Elevated total cholesterol in midlife has been associated with increased risk of dementia in later life. We have previously shown that low-density lipoprotein (LDL) is more oxidized in the plasma of dementia patients, although total cholesterol levels are not different from those of age-matched controls. β-Amyloid (Aβ) peptide, which accumulates in Alzheimer disease (AD), arises from the initial cleavage of amyloid precursor protein by β-secretase-1 (BACE1). BACE1 activity is regulated by membrane lipids and raft formation. Given the evidence for altered lipid metabolism in AD, we have investigated a mechanism for enhanced Aβ production by SH-SY5Y neuronal-like cells exposed to oxidized LDL (oxLDL). The viability of SH-SY5Y cells exposed to 4 μg oxLDL and 25 µM 27-hydroxycholesterol (27OH-C) was decreased significantly. Lipids, but not proteins, extracted from oxLDL were more cytotoxic than oxLDL. In parallel, the ratio of reduced glutathione (GSH) to oxidized glutathione was decreased at sublethal concentrations of lipids extracted from native and oxLDL. GSH loss was associated with an increase in acid sphingomyelinase (ASMase) activity and lipid raft formation, which could be inhibited by the ASMase inhibitor desipramine. 27OH-C and total lipids from LDL and oxLDL independently increased Aβ production by SH-SY5Y cells, and Aβ accumulation could be inhibited by desipramine and by N-acetylcysteine. These data suggest a mechanism whereby oxLDL lipids and 27OH-C can drive Aβ production by GSH depletion, ASMase-driven membrane remodeling, and BACE1 activation in neuronal cells., Graphical abstract, Highlights • Oxidized LDL lipids but not proteins oxidize SHSY-5Y cell glutathione, triggering lipid rafts. • Oxidized lipid-induced rafts promote β-secretase activity and β-amyloid secretion. • These effects are mimicked by 27-hydroxycholesterol present in oxidized LDL.