Information on the molecular biology of Alzheimer's disease (AD) pointing to new methods of diagnosis and drug therapies is explored. AD is the most common cause of dementia in the elderly and is characterized by senile plaques and neurofibrillary tangles in the brain and loss of cholinergic neurons in the basal forebrain. The disease has a strong genetic component. A definitive diagnosis can be made only by neuropathologic examination at autopsy or biopsy; however, the accuracy of diagnosis based on standard neuropsychological testing and inclusion criteria has improved considerably. Senile plaques consist of a central core of amyloid fibrils surrounded by dystrophic axons. The main component of senile plaque amyloid is a 39-to 42-amino-acid segment referred to as beta-amyloid, which is derived from amyloid precursor protein (APP). APP exists as multiple isoforms encoded by a single gene on chromosome 21. Factors that may influence APP metabolism include activation of phospholipase C, phosphorylation, and the cholinergic system. The microtubule-associated protein tau may contribute to the neurofibrillary tangles of AD. In AD all six adult isoforms of tau can become maximally phosphorylated and can, rather than binding to microtubules, bind to each other, destabilizing the neuronal cytoskeleton. One of the most important discoveries in AD research was the linking of apolipoprotein E phenotype to familial late-onset AD. Acetylcholinesterase inhibitors appear to improve cognitive function but may be limited in utility by adverse effects. Nicotinic agonists are also being investigated as symptomatic therapies. Other possible strategies include nerve growth factor, agents that potentiate the action of endogenous glutamate, antioxidants, nonsteroidal anti-inflammatory drugs, and estrogens. Research into the molecular biology of Alzheimer's disease has begun to point to possible causes of and treatments for this condition.