The apolipoprotein E4 (APOE4) variant is the single greatest genetic risk factor for sporadic Alzheimer’s disease (sAD). However, the cell-type-specific functions of APOE4 in relation to AD pathology remain understudied. Here, we utilize CRISPR/Cas9 and induced pluripotent stem cells (iPSCs) to examine APOE4 effects on human brain cell types. Transcriptional profiling identified hundreds of differentially expressed genes in each cell type, with the most affected involving synaptic function (neurons), lipid metabolism (astrocytes), and immune response (microglia-like cells). APOE4 neurons exhibited increased synapse number and elevated Aβ42 secretion relative to isogenic APOE3 cells while APOE4 astrocytes displayed impaired Aβ uptake and cholesterol accumulation. Notably, APOE4 microglia-like cells exhibited altered morphologies, which correlated with reduced Aβ phagocytosis. Consistently, converting APOE4 to APOE3 in brain cell types from sAD iPSCs was sufficient to attenuate multiple AD-related pathologies. Our study establishes a reference for human cell-type-specific changes associated with the APOE4 variant.