Oxysterols are oxidation products of cholesterol that are generated by enzymatic reactions mediated by cytochrome P450 family enzymes or by non-enzymatic reactions involving reactive oxygen and nitrogen species. Oxysterols play various regulatory roles in normal cellular processes such as cholesterol homeostasis by acting as intermediates in cholesterol catabolism. Pathological effects of oxysterols have also been described, and various reports have implicated oxysterols in several disease states, including atherosclerosis, neurological disease, and cancer. Numerous studies show that oxysterols are associated with various types of cancer, including cancers of the colon, lung, skin, breast and bile ducts. The molecular mechanisms whereby oxysterols contribute to the initiation and progression of cancer are an area of active investigation. This review focuses on the current state of knowledge regarding the role of oxysterols in carcinogenesis. Mutagenicity of oxysterols has been described in both nuclear and mitochondrial DNA. Certain oxysterols such as cholesterol-epoxide and cholestanetriol have been shown to be mutagenic and genotoxic. Oxysterols possess pro-oxidative and pro-inflammatory properties that can contribute to carcinogenesis. Oxysterols can induce the production of inflammatory cytokines such as interleukin-8 and interleukin-1β. Certain oxysterols are also involved in the induction of cyclo-oxygenase-2 expression. Inflammatory effects can also be mediated through the activation of liver-X-receptor, a nuclear receptor for oxysterols. Thus, several distinct molecular mechanisms have been described showing that oxysterols contribute to the initiation and progression of cancers arising in various organ systems.