One of the major tasks in understanding the etiopathogenesis of amyloid beta-induced neurotoxicity of Alzheimer's disease (AD), is in fully capturing the large number of the biochemical processes that influence each other during the course of the disease, in vivo. Model membranes possess, as their main strength, the ability to enable the researcher to manipulate a ‘biological’ micro-vesicle under a controlled environment. This review narrowly focuses on discussing the exploitation of model membranes for improved understanding of some of the mechanisms governing AD's amyloid beta-induced neurotoxicity. Amyloid beta (Aβ) is cleaved from a membrane-located amyloid precursor protein by membrane-located enzymes. The relative spatial localization of the involved biomolecules within the membrane bilayer is crucial in influencing Aβ production, its aggregation on the membrane surface or insertion into the membrane, and fibril formation: all important processes in causing neurotoxicity. The lipid composition of the bilayer is similarly important. The review also attempts to highlight current and future challenges in using model membranes for studying biochemical processes. Biotechnol. Bioeng. 2008;99: 753–763. © 2007 Wiley Periodicals, Inc.