Niemann-Pick type C (NPC) disease, a lysosomal storage disorder caused by defective NPC1/NPC2 function, results in the accumulation of cholesterol and glycosphingolipids in lysosomes of affected organs, such as liver and brain. Moreover, increase of mitochondrial cholesterol (mchol) content and impaired mitochondrial function and GSH depletion contribute to NPC disease. However, the underlying mechanism of mchol accumulation in NPC disease remains unknown. As STARD1 is crucial in intramitochondrial cholesterol trafficking and acid ceramidase (ACDase) has been shown to regulate STARD1, we explored the functional relationship between ACDase and STARD1 in NPC disease. Liver and brain of Npc1-/- mice presented a significant increase in mchol levels and STARD1 expression. U18666A, an amphiphilic sterol that inhibits lysosomal cholesterol efflux, increased mchol levels in hepatocytes from Stard1f/f mice but not Stard1ΔHep mice. We dissociate the induction of STARD1 expression from endoplasmic reticulum stress, and establish an inverse relationship between ACDase and STARD1 expression and LRH-1 levels. Hepatocytes from Npc1+/+ mice treated with U18666A exhibited increased mchol accumulation, STARD1 upregulation and decreased ACDase expression, effects that were reversed by cholesterol extraction with 2-hydroxypropyl-β-cyclodextrin. Moreover, transfection of fibroblasts from NPC patients with ACDase, decreased STARD1 expression and mchol accumulation, resulting in increased mitochondrial GSH levels, improved mitochondrial functional performance, decreased oxidative stress and protected NPC fibroblasts against oxidative stress-mediated cell death. Our results demonstrate a cholesterol-dependent inverse relationship between ACDase and STARD1 and provide a novel approach to target the accumulation of cholesterol in mitochondria in NPC disease.