Various types of lipids and their metabolic products associated with the biological membrane play a crucial role in signal transduction, modulation, and activation of receptors and as precursors of bioactive lipid mediators. Dysfunction in the lipid homeostasis in the brain could be a risk factor for the many types of neurodegenerative disorders, including Alzheimer's disease, Huntington's disease, Parkinson's disease, and amyotrophic lateral sclerosis. These neurodegenerative disorders are marked by extensive neuronal apoptosis, gliosis, and alteration in the differentiation, proliferation, and development of neurons. Sphingomyelin, a constituent of plasma membrane, as well as its primary metabolite ceramide acts as a potential lipid second messenger molecule linked with the modulation of various cellular signaling pathways. Excessive production of reactive oxygen species associated with enhanced oxidative stress has been implicated with these molecules and involved in the regulation of a variety of different neurodegenerative and neuroinflammatory disorders. Studies have shown that alterations in the levels of plasma lipid/cholesterol concentration may result to neurodegenerative diseases. Alteration in the levels of inflammatory cytokines and mediators in the brain has also been found to be implicated in the pathophysiology of neurodegenerative diseases. Although several mechanisms involved in neuronal apoptosis have been described, the molecular mechanisms underlying the correlation between lipid metabolism and the neurological deficits are not clearly understood. In the present review, an attempt has been made to provide detailed information about the association of lipids in neurodegeneration especially in Alzheimer's disease.