Apolipoprotein E (apoE) is an important protein involved in lipoprotein clearance and cholesterol redistribution. ApoE is abundantly expressed in astrocytes in the brain and is closely linked to the pathogenesis of Alzheimer's disease (AD). We report here that small molecule ligands that activate either liver X receptors (LXR) or retinoid X receptor (RXR) lead to a dramatic increase in apoE mRNA and protein expression as well as secretion of apoE in a human astrocytoma cell line (CCF‐STTG1 cells). Examination of primary mouse astrocytes also revealed significant induction of apoE mRNA, and protein expression and secretion following incubation with LXR/RXR agonists. Moreover, treatment of mice with a specific synthetic LXR agonist T0901317 resulted in up‐regulation of apoE mRNA and protein in both hippocampus and cerebral cortex, indicating that apoE expression in brain can be up‐regulated by LXR agonists in vivo. Along with a dramatic induction of ABCA1 cholesterol transporter expression, these ligands effectively mediate cholesterol efflux in both CCF‐STTG1 cells and mouse astrocytes in the presence or absence of apolipoprotein AI (apoAI). Our studies provide strong evidence that small molecule LXR/RXR agonists can effectively mediate apoE synthesis and secretion as well as cholesterol homeostasis in astrocytes. LXR/RXR agonists may have significant impact on the pathogenesis of multiple neurological diseases, including AD.