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Abstract Background Apolipoprotein E (ApoE) ε4 genotype is the most prevalent risk factor for late-onset Alzheimer’s Disease (AD). Although ApoE4 differs from its non-pathological ApoE3 isoform only by the C112R mutation, the molecular mechanism of its proteinopathy is unknown. Methods Here, we reveal the molecular mechanism of ApoE4 aggregation using a combination of experimental and computational techniques, including X-ray crystallography, site-directed mutagenesis, hydrogen-deuterium mass spectrometry (HDX-MS), static light scattering and molecular dynamics simulations. Treatment of ApoE ε3/ε3 and ε4/ε4 cerebral organoids with tramiprosate was used to compare the effect of tramiprosate on ApoE4 aggregation at the cellular level. Results We found that C112R substitution in ApoE4 induces long-distance (> 15 Å) conformational changes leading to the formation of a V-shaped dimeric unit that is geometrically different and more aggregation-prone than the ApoE3 structure. AD drug candidate tramiprosate and its metabolite 3-sulfopropanoic acid induce ApoE3-like conformational behavior in ApoE4 and reduce its aggregation propensity. Analysis of ApoE ε4/ε4 cerebral organoids treated with tramiprosate revealed its effect on cholesteryl esters, the storage products of excess cholesterol. Conclusions Our results connect the ApoE4 structure with its aggregation propensity, providing a new druggable target for neurodegeneration and ageing. Graphic Abstract