The brain is the most cholesterol-rich organ in mammals. However, cholesterol metabolism in the brain is completely independent of other tissues due to the presence of the blood-brain barrier (BBB). Neurons, astrocytes and oligodendrocytes are the main cells responsible for cholesterol synthesis in the brain. The cholesterol content in the brain is maintained at a relatively constant level under strict regulation of synthesis, transport, and turnover, that is, brain cholesterol homeostasis. Once this balance is disrupted, neurodegenerative diseases including Alzheimer's disease (AD), Parkinson's disease (PD) and Huntington's disease (HD) ensue. This review summarizes the processes controlling cholesterol homeostasis with respect to the synthesis, transport and turnover of cholesterol in the brain. We further focus on how cholesterol imbalance contributes to neurodegenerative diseases to explore the possibilities to modulate the key steps involved, which will provide clues for the development of therapies for the treatment of central nervous system (CNS) diseases.