In the brain, insulin plays an important role in cognitive processes. During aging, these faculties decline, as does insulin signaling. The mechanism behind this last phenomenon is unclear. In recent studies, we reported that the mild and gradual loss of cholesterol in the synaptic fraction of hippocampal neurons during aging leads to a decrease in synaptic plasticity evoked by glutamate receptor activation and also by receptor tyrosine kinase (RTK) signaling. As insulin and insulin growth factor activity are dependent on tyrosine kinase receptors, we investigated whether the constitutive loss of brain cholesterol is also involved in the decay of insulin function with age. Using long-term depression (LTD) induced by application of insulin to hippocampal slices as a read-out, we found that the decline in insulin function during aging could be monitored as a progressive impairment of insulin-LTD. The application of a cholesterol inclusion complex, which donates cholesterol to the membrane and increases membrane cholesterol levels, rescued the insulin signaling deficit and insulin-LTD. In contrast, extraction of cholesterol from hippocampal neurons of adult mice produced the opposite effect. Furthermore, in vivo inhibition of Cyp46A1, an enzyme involved in brain cholesterol loss with age, improved insulin signaling. Fluorescence resonance energy transfer (FRET) experiments pointed to a change in receptor conformation by reduced membrane cholesterol, favoring ligand-independent autophosphorylation. Together, these results indicate that changes in membrane fluidity of brain cells during aging play a key role in the decay of synaptic plasticity and cognition that occurs at this late stage of life.