The amyloid precursor protein (APP) plays a crucial role in the pathogenesis of Alzheimer’s disease. During intracellular transport APP undergoes a series of proteolytic cleavages that lead to the release either of an amyloidogenic fragment called β-amyloid (Aβ) or of a nonamyloidogenic secreted form consisting of the ectodomain of APP (APP_sec). It is Aβ that accumulates in the brain lesions that are thought to cause the disease. By reducing the cellular cholesterol level of living hippocampal neurons by 70% with lovastatin and methyl-β-cyclodextrin, we show that the formation of Aβ is completely inhibited while the generation of APP_sec is unperturbed. This inhibition of Aβ formation is accompanied by increased solubility in the detergent Triton X-100 and is fully reversible by the readdition of cholesterol to previously depleted cells. Our results show that cholesterol is required for Aβ formation to occur and imply a link between cholesterol, Aβ, and Alzheimer’s disease.