Alzheimer’s disease (AD) is one of the most devastating neurodegenerative diseases. It has been known for decades that the APOE ɛ4 allele is the most significant genetic risk factor for late-onset AD and yet its precise role in the disease remains unclear. The APOE gene encodes apolipoprotein E (apoE), a 35 kDa glycoprotein highly expressed in the brain. There are three different isoforms: apoE3 is the most common allele in the population, whilst apoE2 decreases, and apoE4 increases AD risk. ApoE has numerous functions that affect neuronal and non-neuronal cells, thus how it contributes to disease onset and progression is hotly debated. The apoE4 isoform has been linked to the accumulation of both of the major pathological hallmarks of AD, amyloid plaques containing amyloid β peptides, and neurofibrillary tangles containing hyperphosphorylated tau protein, as well as other hallmarks of the disease, including inflammation and oxidative stress. Numerous studies have shown that apoE undergoes fragmentation in the human brain, and that the fragmentation pattern varies between isoforms. It was previously shown that apoE4 has neurotoxic functions, however recent data has also identified a neuroprotective role for the apoE N-terminal 25 kDa fragment, which is more prevalent in apoE3 individuals. The ability of the apoE 25 kDa fragment to promote neurite outgrowth was recently demonstrated and this suggests there is a potential loss of neuroprotection in apoE4 individuals in addition to the previously described gain of toxic function for specific apoE4 fragments. Here we review the enzymes proposed to be responsible for apoE fragmentation, the specific functions of different apoE fragments and their possible links with AD.