ApoE4 enhances Tau neurotoxicity and promotes the early onset of AD. Pretangle Tau in the noradrenergic locus coeruleus (LC) is the earliest detectable AD-like pathology in the human brain. However, a direct relationship between ApoE4 and Tau in the LC has not been identified. Here we show that ApoE4 selectively binds to the vesicular monoamine transporter 2 (VMAT2) and inhibits neurotransmitter uptake. The exclusion of norepinephrine (NE) from synaptic vesicles leads to its oxidation into the toxic metabolite 3,4-dihydroxyphenyl glycolaldehyde (DOPEGAL), which subsequently activates cleavage of Tau at N368 by asparagine endopeptidase (AEP) and triggers LC neurodegeneration. Our data reveal that ApoE4 boosts Tau neurotoxicity via VMAT2 inhibition, reduces hippocampal volume, and induces cognitive dysfunction in an AEP- and Tau N368-dependent manner, while conversely ApoE3 binds Tau and protects it from cleavage. Thus, ApoE4 exacerbates Tau neurotoxicity by increasing VMAT2 vesicle leakage and facilitating AEP-mediated Tau proteolytic cleavage in the LC via DOPEGAL.