Niemann Pick type C1 and C2 (NPC1 and NPC2) are two sterol-binding proteins which, together, orchestrate cholesterol transport through late endosomes and lysosomes (LE/LYSs). NPC2 can facilitate sterol exchange between model membranes severalfold, but how this is connected to its function in cells is poorly understood. Using fluorescent analogs of cholesterol and quantitative fluorescence microscopy, we have recently measured the transport kinetics of sterol between plasma membrane (PM), recycling endosomes (REs) and LE/LYSs in control and NPC2 deficient fibroblasts. Here, we use kinetic modeling of this data to determine rate constants for sterol transport between intracellular compartments. Our model predicts that sterol is trapped in intraluminal vesicles (ILVs) of LE/LYSs in the absence of NPC2, causing delayed sterol export from LE/LYSs in NPC2 deficient fibroblasts. Using soft X-ray tomography, we confirm, that LE/LYSs of NPC2 deficient cells but not of control cells contain enlarged, carbon-rich intraluminal vesicular structures, supporting our model prediction of lipid accumulation in ILVs. By including sterol export via exocytosis of ILVs as exosomes and by release of vesicles—ectosomes—from the PM, we can reconcile measured sterol efflux kinetics and show that both pathways can be reciprocally regulated by the intraluminal sterol transfer activity of NPC2 inside LE/LYSs. Our results thereby connect the in vitro function of NPC2 as sterol transfer protein between membranes with its in vivo function.