Abstract Background Niemann-Pick disease, type C (NPC) is a childhood-onset, lethal, neurodegenerative disorder caused by autosomal recessive mutations in the genes NPC1 or NPC2 and characterized by impaired cholesterol homeostasis, a lipid essential for cellular function. Cellular cholesterol levels are tightly regulated, and mutations in either NPC1 or NPC2 lead to deficient transport and accumulation of unesterified cholesterol in the late endosome/lysosome compartment, and progressive neurodegeneration in affected individuals. Previous cell-based studies to understand the NPC cellular pathophysiology and screen for therapeutic agents have mainly used patient fibroblasts. However, these do not allow modeling the neurodegenerative aspect of NPC disease, highlighting the need for an in vitro system that permits understanding the cellular mechanisms underlying neuronal loss and identifying appropriate therapies. This study reports the development of a novel human iPSC-derived, inducible neuronal model of Niemann-Pick disease, type C1 (NPC1). Results We generated a null i3Neuron (inducible × integrated × isogenic) (NPC1−/− i3Neuron) iPSC-derived neuron model of NPC1. The NPC1−/− and the corresponding isogenic NPC1+/+ i3Neuron cell lines were used to efficiently generate homogenous, synchronized neurons that can be used in high-throughput screens. NPC1−/− i3Neurons recapitulate cardinal cellular NPC1 pathological features including perinuclear endolysosomal storage of unesterified cholesterol, accumulation of GM2 and GM3 gangliosides, mitochondrial dysfunction, and impaired axonal lysosomal transport. Cholesterol storage, mitochondrial dysfunction, and axonal trafficking defects can be ameliorated by treatment with 2-hydroxypropyl-β-cyclodextrin, a drug that has shown efficacy in NPC1 preclinical models and in a phase 1/2a trial. Conclusion Our data demonstrate the utility of this new cell line in high-throughput drug/chemical screens to identify potential therapeutic agents. The NPC1−/− i3Neuron line will also be a valuable tool for the NPC1 research community to explore the pathological mechanisms contributing to neuronal degeneration. Graphical abstract