Although NPC1L1 is required for intestinal cholesterol absorption, data demonstrating mechanisms by which this protein facilitates the process are few. In this study, a hepatoma cell line stably expressing human NPC1L1 was established, and cholesterol uptake was studied. A relationship between NPC1L1 intracellular trafficking and cholesterol uptake was apparent. At steady state, NPC1L1 proteins localized predominantly to the transferrin-positive endocytic recycling compartment, where free cholesterol also accumulated as revealed by filipin staining. Interestingly, acute cholesterol depletion induced with methyl-beta-cyclodextrin stimulated relocation of NPC1L1 to the plasma membrane, preferentially to a newly formed "apical-like" subdomain. This translocation was associated with a remarkable increase in cellular cholesterol uptake, which in turn was dose-dependently inhibited by ezetimibe, a novel cholesterol absorption inhibitor that specifically binds to NPC1L1. These findings define a cholesterol-regulated endocytic recycling of NPC1L1 as a novel mechanism regulating cellular cholesterol uptake.