2-Hydroxy-propyl-β-cyclodextrin (HPβCD), a cholesterol scavenger, is currently undergoing Phase 2b/3 clinical trial for treatment of Niemann Pick Type C-1 (NPC1), a fatal neurodegenerative disorder that stems from abnormal cholesterol accumulation in the endo/lysosomes. Unfortunately, the extremely high doses of HPβCD required to prevent progressive neurodegeneration exacerbates ototoxicity, pulmonary toxicity and autophagy-based cellular defects. We present unexpected evidence that a poly (ethylene glycol) (PEG)-lipid conjugate enables cholesterol clearance from endo/lysosomes of Npc1 mutant (Npc1(-/-)) cells. Herein, we show that distearyl-phosphatidylethanolamine-PEG (DSPE-PEG), which forms 12-nm micelles above the critical micelle concentration, accumulates heavily inside cholesterol-rich late endosomes in Npc1(-/-) cells. This potentially results in cholesterol solubilization and leakage from lysosomes. High-throughput screening revealed that DSPE-PEG, in combination with HPβCD, acts synergistically to efflux cholesterol without significantly aggravating autophagy defects. These well-known excipients can be used as admixtures to treat NPC1 disorder. Increasing PEG chain lengths from 350 Da-30 kDa in DSPE-PEG micelles, or increasing DSPE-PEG content in an array of liposomes packaged with HPβCD, improved cholesterol egress, while Pluronic block copolymers capable of micelle formation showed slight effects at high concentrations. We postulate that PEG-lipid based nanocarriers can serve as bioactive drug delivery systems for effective treatment of lysosomal storage disorders.