The nematode Caenorhabditis elegans requires exogenous cholesterol to survive and its depletion leads to early developmental arrest. Thus, tight regulation of cholesterol storage and distribution within the organism is indispensable. Here, we present a novel class of C. elegans phosphorylated glycosphingolipids, phosphoethanolamine glucosylceramides (PEGCs), capable of rescuing larval arrest induced by sterol starvation. We describe the total synthesis of a major PEGC species and demonstrate that the PEGC synthetic counterpart suppresses the dauer-constitutive phenotype of Niemann-Pick C1 (NPC1) and DAF-7/TGF-β mutant worms caused by impaired intracellular sterol trafficking. PEGC biosynthesis depends on functional NPC1 and TGF-β, indicating that these proteins control larval development at least partly through PEGC. Furthermore, glucosylceramide deficiency dramatically reduced PEGC amounts. However, the resulting developmental arrest could be rescued by oversaturation of food with cholesterol. Taken together, these data show that PEGC is essential for C. elegans development through its regulation of sterol mobilization.