Alzheimer’s disease (AD) is the most prevalent form of age-related dementia. A pathological hallmark of AD is the accumulation in the brain of amyloid-β (Aβ) peptides, which aggregate at neuronal contact points into ordered fibrils and cords, ultimately shaping into senile plaques. Various Aβ isoforms are present in healthy human brains across all age groups, where they appear to participate in neuronal signaling pathways and exhibit neuroprotective properties at normal physiological concentrations. Aβ peptides are products of stepwise proteolytic degradation of the amyloid precursor protein (APP), a membrane-bound single-span glycoprotein, by β- and γ-secretases. The APP gene contains numerous familial mutations connected to early-onset AD, most of them occurring in the transmembrane and juxtamembrane regions. The proteolytic processing of APP into Aβ is controlled by several factors, including its subcellular localization, membrane lipid composition, and potentially its association with cholesterol- and sphingolipid-enriched lipid rafts. Interestingly, structurally and functionally resembling type I membrane receptors, APP has been suggested to play a role in cholesterol sensing in the neuronal membrane rafts. By this means, APP might engage in cell signaling processes, support iron equilibrium in neurons, participate in inflammatory responses, and modulate synaptic plasticity. This concise review summarizes key findings from biophysical and structural studies investigating the interactions of APP and its proteolytic fragments with plasma membrane components, particularly cholesterol and its derivatives. These interactions are viewed in the context of both normal physiological development and AD pathogenesis.