Niemann-Pick type C1 (NPC1) is a polytopic endosomal membrane protein required for efflux of LDL-derived cholesterol from endosomes, and mutations of this protein are associated with Niemann-Pick disease type C, a fatal neurodegenerative disease. At least one prevalent mutation (I1061T) has been shown to cause a folding defect, which results in failure of endosomal localization, leading to a loss-of-function phenotype. Here, we show that several oxysterols and their derivatives act as pharmacological chaperones; binding of these compounds to I1061T NPC1 corrects the localization/maturation defect of the mutant protein. Further, these compounds alleviate intracellular cholesterol accumulation in patient-derived fibroblasts, suggesting that they may have therapeutic potential. These oxysterol derivatives bind to a domain of NPC1 that is different from the known N-terminal sterol-binding domain; i.e., there is an additional sterol-binding site on NPC1.