The NPC1 family of proteins plays crucial roles in the intestinal absorption and intracellular trafficking of sterols. The Drosophila genome encodes two NPC1 homologs, one of which, NPC1a, is required for intracellular sterol trafficking in many tissues. Here we show that the other Drosophila NPC1 family member, NPC1b, is expressed in the midgut epithelium and that NPC1b is essential for growth during the early larval stages of development. NPC1b mutants are severely defective in sterol absorption, and the midgut epithelium of NPC1b mutants is deficient in sterols and sterol trafficking intermediates. By contrast, NPC1a mutants absorb sterols more efficiently than wild-type animals, and, unexpectedly, NPC1b;NPC1a double mutants absorb sterols as efficiently as wild-type animals. Together, these findings suggest that NPC1b plays an early role in sterol absorption, although sterol absorption continues at high efficiency through an NPC1a- and NPC1b-independent mechanism under conditions of impaired intracellular sterol trafficking.