Niemann-Pick Type C (NPC) disease is associated with accumulation of cholesterol and other lipids in late endosomes/lysosomes in virtually every organ; however, neurodegeneration represents the fatal cause for the disease. Genetic analysis has identified loss-of-function mutations in NPC1 and NPC2 genes as the molecular triggers for the disease. Although the precise function of these proteins has not yet been clarified, recent research suggests that they orchestrate cholesterol efflux from late endosomes/lysosomes. NPC protein deficits result in impairment in intracellular cholesterol trafficking and dysregulation of cholesterol biosynthesis. Disruption of cholesterol homeostasis is also associated with deregulation of autophagic activity and early-onset neuroinflammation, which may contribute to the pathogenesis of NPC disease. This chapter reviews recent achievements in the investigation of disruption of cholesterol homeostasis-induced neurodegeneration in NPC disease, and provides new insight for developing a potential therapeutic strategy for this disorder.