The full impact of apolipoprotein E4 (APOE4), the strongest genetic risk factor for Alzheimer's disease (AD), on neuronal and network function remains unclear. We found hippocampal region-specific network hyperexcitability in young APOE4 knock-in (E4-KI) mice which predicted cognitive deficits at old age. Network hyperexcitability in young E4-KI mice was mediated by hippocampal region-specific subpopulations of smaller and hyperexcitable neurons that were eliminated by selective removal of neuronal APOE4. Aged E4-KI mice exhibited hyperexcitable granule cells, a progressive inhibitory deficit, and E/I imbalance in the dentate gyrus, exacerbating hippocampal hyperexcitability. Single-nucleus RNA-sequencing revealed neuronal cell type-specific and age-dependent transcriptomic changes, including Nell2 overexpression in E4-KI mice. Reducing Nell2 expression in specific neuronal types of E4-KI mice with CRISPRi rescued their abnormal excitability phenotypes, implicating Nell2 overexpression as a cause of APOE4-induced hyperexcitability. These findings highlight the early transcriptomic and electrophysiological alterations underlying APOE4-induced hippocampal network dysfunction and its contribution to AD pathogenesis with aging.