Apolipoprotein E epsilon4 is a major genetic risk factor for Alzheimer's disease, but the neurobiological basis for this risk is unknown. We used diffusion tensor imaging to measure diffusion anisotropy in the parahippocampal gyrus white matter in healthy elderly apolipoprotein E epsilon4 carriers and noncarriers. We also measured volumes of the lateral ventricles and temporal horns as proxies of cerebral atrophy. The epsilon4 carriers (n=14) showed significantly lower fractional anisotropy and higher radial diffusivity in the parahippocampal white matter 15 mm below the anterior commissure-posterior commissure plane than noncarriers (n=15). No group differences in ventricular volumes were found, nor were diffusion tensor imaging measures modulated by ventricular volumes. Diffusion tensor imaging may be sufficiently sensitive to detect preclinical brain changes related to Alzheimer's disease.