Niemann-Pick disease type C (NPC) is a rare, fatal, neurodegenerative lysosomal disease caused by mutations of either NPC1 or NPC2. NPC2 is a soluble lysosomal protein which functions in coordination with NPC1 to efflux cholesterol from the lysosomal compartment. Mutations of either gene result in the accumulation of unesterified cholesterol and other lipids in the late endosome/lysosome, while reducing cellular cholesterol bioavailability. Zygotic null npc2m/m zebrafish showed significant unesterified cholesterol accumulation at larval stages, a reduction in body size, and motor and balance defects in adulthood. However, the phenotype at embryonic stages was milder than expected, suggesting a possible role of maternal Npc2 in embryonic development. Maternal-zygotic npc2m/m zebrafish exhibited significant developmental defects including defective otic vesicle development/absent otoliths, abnormal head/brain development, curved/twisted body axes, no circulating blood cells, and died by 72 hpf. RNA-seq analysis conducted on 30 hpf npc2+/m and MZnpc2m/m embryos revealed a significant reduction in the expression of notch3 and other downstream genes in the Notch signaling pathway, suggesting that impaired Notch3 signaling underlies aspects of the developmental defects observed in MZnpc2m/m zebrafish.