A subtle decline in episodic memory often occurs prior to the emergence of the full dementia syndrome in nondemented older adults who develop Alzheimer's disease (AD). The APOE-epsilon4 genotype may engender a more virulent form of AD that hastens this decline. To examine this possibility, we compared the rate of decline in episodic memory during the preclinical phase of AD in individuals with or without at least one APOE epsilon4 allele. Nondemented normal control (NC; n = 84) participants, nondemented older adults who subsequently developed dementia within 1 or 2 years (i.e., preclinical AD; n = 20), and patients with mild AD (n = 53) were examined with 2 commonly employed tests of episodic memory, the Logical Memory subtest of the Wechsler Memory Scale-Revised and the California Verbal Learning Test. Results revealed a precipitous decline in verbal memory abilities 1 to 2 years prior to the onset of the dementia syndrome, but there was little effect of APOE genotype on the rate of this memory decline. The presence of an APOE-epsilon4 allele, however, did have a differential effect on the sensitivity of the 2 types of memory tests for tracking progression and made an independent contribution to the prediction of conversion to AD.