Enhancers, critical regulatory elements within the human genome, are often transcribed into enhancer RNAs. The dysregulation of enhancers leads to diseases collectively termed enhanceropathies. While it is known that enhancers play a role in diseases by regulating gene expression, the specific mechanisms by which individual enhancers cause diseases are not well understood. Studies of individual enhancers are needed to fill this gap. This study delves into the role of APOE-activating noncoding RNA, AANCR, in the central nervous system, elucidating its function as a genetic modifier in Alzheimers Disease. We employed RNA interference, RNaseH-mediated degradation, and single-molecule RNA fluorescence in situ hybridization to demonstrate that mere transcription of AANCR is insufficient; rather, its transcripts are crucial for promoting APOE expression. Our findings revealed that AANCR is induced by ATM-mediated ERK phosphorylation and subsequent AP-1 transcription factor activation. Once activated, AANCR enhances APOE expression, which in turn imparts an inflammatory phenotype to astrocytes. These findings demonstrate that AANCR is a key enhancer RNA in some cell types within the nervous system, pivotal for regulating APOE expression and influencing inflammatory responses, underscoring its potential as a therapeutic target in neurodegenerative diseases.