ATP binding cassette A1 (ABCA1) is a membrane protein that promotes cellular cholesterol efflux. Using RAW 264.7 macrophages, we studied the relative effects of apolipoprotein (apo) E3 and apoE4 on ABCA1 and on the signaling pathway that regulates its expression. Both lipid-associated and lipid-free apoE4 forms induced ~30% lower levels of ABCA1 protein and mRNA than apoE3 forms. Phosphorylated levels of phosphoinositol 3-kinase (PI3K), protein kinase Cζ (PKCζ) and specificity protein 1 (Sp1) were also lower when treated with apoE4 compared to apoE3. The reduced ability of apoE4 to induce ABCA1 expression, PKCζ and Sp1 phosphorylation were confirmed in human THP-1 monocytes/macrophages. Sequential phosphorylation of PI3K, PKCζ and Sp1 has been suggested as a mechanism for upregulation of ABCA1 expression. Both apoE3 and apoE4 reduced total cholesterol and cholesterol esters in lipid-laden RAW 264.7 cells, and induced apoAI-mediated cholesterol efflux. However, the cholesterol esters and cholesterol efflux in apoE4-treated cells were ~50% and ~24% lower, respectively, compared to apoE3-treated cells. Accumulation of cholesterol esters in macrophages is a mechanism for foam cell formation. Thus the reduced ability of apoE4 to activate the PI3K-PKCζ-Sp1 signaling pathway and induce ABCA1 expression likely impairs cholesterol ester removal, and increases foam cell formation.