Cholesterol is a fat-like substance with a pivotal physiological relevance in humans, and its homeostasis is tightly regulated by various cellular processes, including the import in the small intestine and the reabsorption in the biliary ducts by the Niemann-Pick C1 Like 1 (NPC1L1) importer. NPC1L1 can mediate the absorption of a variety of sterols but strikingly exhibits a large sensitivity to cholesterol epimerization. This study examines the molecular basis of the epimerization-related selective binding of cholesterol by combining extended unbiased molecular dynamics simulations of the apo and holo species of the N-terminal domain of wild-type NPC1L1, in conjunction with relative binding free energy, umbrella sampling, and well-tempered metadynamics calculations. The analysis of the results discloses the existence of two distinct binding modes for cholesterol and epi-cholesterol. The former binds deeper in the cavity, forming key hydrogen-bond interactions with Q95, S56, and a water molecule. In contrast, epi-cholesterol is shifted ca. 3 Å to the mouth of the cavity and the transition to the Q95 site is prevented by an energetic barrier of 4.1 kcal·mol-1. Thus, the configuration of the hydroxyl group of cholesterol, together with the presence of a structural water molecule, is a key feature for effective absorption. Finally, whereas these findings may seemingly be challenged by single-point mutations that impair cholesterol transport but have a mild impact on the binding of cholesterol to the Q95 binding site, our results reveal that they have a drastic influence on the conformational landscape of the α8/β7 loop in the apo species compared to the wild-type protein. Overall, the results give support to the functional role played by the α8/β7 loop in regulating the access of ligands to NPC1L1, and hence to interpreting the impact of these mutations on diseases related to disruption of sterol absorption, paving the way to understanding certain physiological dysfunctions.