Niemann-Pick Type C disease is characterized by disrupted lipid trafficking within the late endosomal (LE)/lysosomal (Lys) cellular compartments. Cholesterol transport within the LE/Lys is believed to take place via a concerted hand-off mechanism in which a small (131aa) soluble cholesterol binding protein, NPC2, transfers cholesterol to the N-terminal domain (NTD) of a larger (1278aa) membrane-bound protein, NPC1(NTD). The transfer is thought to occur through the formation of a stable intermediate complex NPC1(NTD)-NPC2, in which the sterol apertures of the two proteins align to allow passage of the cholesterol molecule. In the working model of the NPC1(NTD)-NPC2 complex, the sterol apertures are aligned, but the binding pockets are bent with respect to one another. In order for cholesterol to slide from one binding pocket to the other, a conformational change must occur in the proteins, in the ligand, or in both. Here, we investigate the possibility that the ligand undergoes a conformational change, or isomerization, to accommodate the bent transfer pathway. To understand what structural factors influence the isomerization rate, we calculate the energy barrier to cholesterol isomerization in both the NPC1(NTD) and NPC2 binding pockets. Here, we use a combined quantum mechanical/molecular mechanical (QM/MM) energy function to calculate the isomerization barrier within the native NPC1(NTD) and NPC2 binding pockets before protein-protein docking as well as in the binding pockets of the NPC1(NTD)-NPC2 complex after docking has occurred. The results indicate that cholesterol isomerization in the NPC2 binding pocket is energetically favorable, both before and after formation of the NPC1(NTD)-NPC2 complex. The NPC1(NTD) binding pocket is energetically unfavorable to conformational rearrangement of the hydrophobic ligand because it contains more water molecules near the ligand tail and amino acids with polar side chains. For three NPC1(NTD) mutants investigated, L175Q/L176Q, L175A/L176A, and E191A/Y192A, the isomerization barriers were all found to be higher than the barrier calculated in the NPC2 binding pocket. Our results indicate that cholesterol isomerization in the NPC2 binding pocket, either before or after docking, may ensure an efficient transfer of cholesterol to NPC1(NTD).