Cholesterol represents an important determinant of the physical state of biological membranes. Growing evidence indicate that changes in brain cholesterol and variations in neuronal membrane structure are involved in the development of Alzheimer's disease (AD). Cholesterol modulates the cleavage of the amyloid precursor protein and thus affect cellular production of beta-amyloid peptides (Ab). On the other hand, cholesterol seems to be protective against the neurotoxic and membrane disordering properties of Ab. Present review summarizes reports focusing on brain membrane changes in AD and the effects of Ab on these structures. Since it has been shown that these Ab effects are cholesterol dependent, recent findings are presented indicating that the modulation of membrane cholesterol refers to different cholesterol pools within the membranes. Further, consequences thereof for possible pharmacological strategies are discussed.