Niemann-Pick type C disease (NPC) is a lysosomal storage disorder causing accumulation of unesterified cholesterol in lysosomal storage organelles. Recent studies have shown that hydroxypropyl-beta-cyclodextrin injections in npc1(-/-) mice are partially effective in treating this disease. Using cultured fibroblasts, we have investigated the cellular mechanisms responsible for reduction of cholesterol accumulation. We show that decreased levels of cholesterol accumulation are maintained for several days after removal of cyclodextrin from the culture medium. This suggests that endocytosed cyclodextrin can reduce the cholesterol storage by acting from inside endocytic organelles rather than by removing cholesterol from the plasma membrane. To test this further, we incubated both NPC1 and NPC2 mutant cells with cholesterol-loaded cyclodextrin for 1 h, followed by chase in serum-containing medium. Although the cholesterol content of the treated cells increased after the 1-h incubation, the cholesterol levels in the storage organelles were later reduced significantly. We covalently coupled cyclodextrin to fluorescent dextran polymers. These cyclodextrin-dextran conjugates were delivered to cholesterol-enriched lysosomal storage organelles and were effective at reducing the cholesterol accumulation. We demonstrate that methyl-beta-cyclodextrin is more potent than hydroxypropyl-beta-cyclodextrin in reducing both cholesterol and bis(monoacylglycerol) phosphate accumulation in NPC mutant fibroblasts. Brief treatment of cells with cyclodextrins causes an increase in cholesterol esterification by acyl CoA:cholesterol acyl transferase, indicating increased cholesterol delivery to the endoplasmic reticulum. These findings suggest that cyclodextrin-mediated enhanced cholesterol transport from the endocytic system can reduce cholesterol accumulation in cells with defects in either NPC1 or NPC2.