The Niemann-Pick C1 (NPC1) protein is a key participant in intracellular sterol trafficking and regulation of cholesterol homeostasis. NPC1 contains a pentahelical region that is evolutionarily related to sterol-sensing domains found in other polytopic proteins involved in sterol interactions or sterol metabolism, including sterol regulatory element-binding protein cleavage-activating protein and hydroxymethylglutaryl-CoA reductase. To gain insight into the role of the sterol-sensing domain of NPC1, we examined the effect of point mutations in the NPC1 sterol-sensing domain on the trafficking of low density lipoprotein-derived cholesterol and sphingolipids. We show that an NPC1 P692S loss of function mutation results in decreased cholesterol delivery to the plasma membrane and endoplasmic reticulum. By contrast, NPC1 proteins carrying a L657F or D787N point mutation, which correspond to the activating SCAP L315F and D443N mutations, respectively, exhibit a gain of function phenotype. Specifically, cell lines expressing the NPC1 L657F or D787N mutations show a nearly 2-fold increase in the rates of low density lipoprotein cholesterol trafficking to the plasma membrane and to the endoplasmic reticulum, and more rapid suppression of sterol regulatory element-binding protein-dependent gene expression. Trafficking of sphingolipids is intact in the D787N and L657F cell lines. Our finding that D787N and L657F are activating NPC1 mutations provide evidence for a conserved mechanism for the sterol-sensing domain among cholesterol homeostatic proteins.