Niemann-Pick C (NPC) disease is a progressive neurological disorder in which cholesterol, gangliosides and bis-monoacylglycerol phosphate accumulate in late endosomes/lysosomes. This disease is caused by mutations in either the NPC1 or NPC2 gene. NPC1 and NPC2 are involved in egress of lipids, particularly cholesterol, from late endosomes/lysosomes but the precise functions of these proteins are not clear. An important question regarding the function of NPC proteins is: why do mutations in these ubiquitously expressed proteins have such dire consequences in the brain? This review summarizes the roles of NPC proteins in lipid homeostasis particularly in the central nervous system.