In Niemann-Pick Type C (NPC) disease, the concentration of cholesterol increases with age in every tissue except the brain. This study investigates whether accumulation of cholesterol might also occur within the cells of the central nervous system (CNS), but be obscured by the simultaneous loss of sterol from myelin as neurodegeneration proceeds. At birth, when there is little myelin in the CNS, the concentration of cholesterol is significantly elevated in every region of the brain in the homozygous NPC mouse. At 7 wk of age, myelination is nearly complete. In the NPC mouse, however, there is striking neurodegeneration and a reduction in both myelin protein and myelin cholesterol. Furthermore, net loss of cholesterol from the CNS is much higher in the NPC mouse than in the control animal (2.23 versus 1.37 mg/day per kg) so that the concentration of sterol in most regions of the brain is reduced. This neurodegeneration and loss of myelin cholesterol is not prevented by deletion of either the low-density lipoprotein receptor or apolipoprotein E in the NPC animal. Thus, the cholesterol sequestration seen in every organ in NPC disease also occurs in cells of the CNS and may be etiologically related to the neurodegeneration.