Different primary lysosomal trafficking defects lead to common alterations in lipid trafficking, suggesting cooperative interactions among lysosomal lipids. However, cellular analysis of the functional consequences of this phenomenon is lacking. As a test case, we studied cells with defective Niemann-Pick C1 (NPC1) protein, a cholesterol trafficking protein whose defect gives rise to lysosomal accumulation of cholesterol and other lipids, leading to NPC disease. NPC1 cells also develop a secondary defect in acid sphingomyelinase (SMase) activity despite a normal acid SMase gene (SMPD1). When acid SMase activity was restored to normal levels in NPC1-deficient CHO cells through SMPD1 transfection, there was a dramatic reduction in lysosomal cholesterol. Two other defects, excess lysosomal bis-(monoacylglycerol) phosphate (BMP) and defective transferrin receptor (TfR) recycling, were also markedly improved. To test its relevance in human cells, the acid SMase activity defect in fibroblasts from NPC1 patients was corrected by SMPD1 transfection or acid SMase enzyme replacement. Both treatments resulted in a dramatic reduction in lysosomal cholesterol. These data show that correcting one aspect of a complex lysosomal lipid storage disease can reduce the cellular consequences even if the primary genetic defect is not corrected.