APOE is a major component of several lipoproteins. In addition to its role as a lipid transport protein APOE also serves a dual role as a glial derived, synaptic signalling molecule and thought to play an important role in synaptic plasticity and cognition. Polymorphisms within the APOE gene have been associated with the incidence of Alzheimer's disease. In light of the similarities in the cognitive deficits experienced in both Alzheimer's disease and schizophrenia as well as the comorbidity of depression in Alzheimer's disease, aberrant APOE signalling has been implicated in the pathologies of schizophrenia and mood disorders. The schizophrenia candidate gene, reelin, also shares common receptors with APOE, further supporting a role for APOE in the pathology of these disorders. This review will summarise the current understanding of the involvement of APOE and its receptors in the symptomatology and pathology of schizophrenia and mood disorders and the implications of this involvement for drug treatment.