Niemann-Pick type C (NP-C) disease is a fatal, autosomal recessive, childhood neurodegenerative disease. The NP-C mouse recapitulates the cholesterol and sphingolipid storage, onset of neurological deficits, histopathological lesions, Purkinje cell loss and early death typical of the most severe form of human NP-C. Neurosteroids, steroids made in the brain, affect neuronal growth and differentiation, and modulate neurotransmitter receptors. Disordered cholesterol trafficking might disrupt neurosteroidogenesis, thereby contributing to the NP-C phenotype. Here we show that NP-C mouse brain contains substantially less neurosteroid than wild-type brain and has an age-related decrease in the ability to synthesize 5alpha-dihydroprogesterone and allopregnanolone. Immunohistochemical assessment confirms a decrease in expression of 5alpha-reductase and 3alpha-hydroxysteroid dehydrogenase, especially in cerebellum. Neonatal administration of allopregnanolone delays the onset of neurological symptoms, increases Purkinje and granule cell survival, reduces cortical GM2 and GM3 ganglioside accumulation and doubles the lifespan of NP-C mice. Earlier administration increases effectiveness of treatment. Decreased production of allopregnanolone apparently contributes to the pathology of NP-C; thus, neurosteroid treatment may be useful in ameliorating progression of the disease.