Cholesterol serves as an essential lipid molecule in various membrane organelles of mammalian cells. The metabolites of cholesterol also play important functions. Acyl-coenzyme A: cholesterol acyltransferase 1 (ACAT1), also named as sterol O-acyltransferase 1, is a membrane-bound enzyme residing at the endoplasmic reticulum (ER). It converts cholesterol to cholesteryl esters (CEs) for storage, and is expressed in all cells. CEs cannot partition in membranes; they can only coalesce as cytosolic lipid droplets. Excess CEs are found in the vulnerable region of the brains of patients with late-onset Alzheimer's disease (AD), and in cell and mouse models for AD. Reducing CE contents by genetic inactivation of ACAT1, or by pharmacological inhibition of ACAT is shown to reduce amyloidopathy and other hallmarks for AD. To account for the various beneficial actions of the ACAT1 blockade (A1B), a working hypothesis is proposed here: the increase in CE contents observed in the AD brain is caused by damages of cholesterol-rich lipid rafts that are known to occur in neurons affected by AD. These damages cause cholesterol to release from lipid rafts and move to the ER where it will be converted to CEs by ACAT1. In addition, the increase in CE contents may also be caused by overloading with cholesterol-rich substances, or through activation of ACAT1 gene expression by various proinflammatory agents. Both scenarios may occur in microglia of the chronically inflamed brain. A1B ameliorates AD by diverting the cholesterol pool destined for CE biosynthesis such that it can be utilized more efficiently to repair membrane damage in various organelles, and to exert regulatory actions more effectively to defend against AD. To test the validity of the A1B hypothesis in cell culture and in vivo, the current status of various anti-ACAT1 agents that could be further developed is briefly discussed.