The ApoE4 allele is associated with increased risk of small vessel disease, which is a cause of vascular cognitive impairment. Here, we report that mice with targeted replacement (TR) of the ApoE gene with human ApoE4 have reduced neocortical cerebral blood flow compared to ApoE3-TR mice, an effect due to reduced vascular density rather than slowing of microvascular red blood cell flow. Furthermore, homeostatic mechanisms matching local delivery of blood flow to brain activity are impaired in ApoE4-TR mice. In a model of cerebral hypoperfusion, these cerebrovascular alterations exacerbate damage to the white matter of the corpus callosum and worsen cognitive dysfunction. Using 3-photon microscopy we found that the increased white matter damage is linked to an enhanced reduction of microvascular flow resulting in local hypoxia. Such alterations may be responsible for the increased susceptibility to hypoxic-ischemic lesions in the subcortical white matter of individuals carrying the ApoE4 allele.