Recent studies have ascribed many non-pumping functions to the Na/K-ATPase. We show here that graded knockdown of cellular Na/K-ATPase alpha1 subunit produces a parallel decrease in both caveolin-1 and cholesterol in light fractions of LLC-PK1 cell lysates. This observation is further substantiated by imaging analyses, showing redistribution of cholesterol from the plasma membrane to intracellular compartments in the knockdown cells. Moreover, this regulation is confirmed in alpha1(+/-) mouse liver. Functionally, the knockdown-induced redistribution appears to affect the cholesterol sensing in the endoplasmic reticulum, because it activates the sterol regulatory element-binding protein pathway and increases expression of hydroxymethylglutaryl-CoA reductase and low density lipoprotein receptor in the liver. Consistently, we detect a modest increase in hepatic cholesterol as well as a reduction in the plasma cholesterol. Mechanistically, alpha1(+/-) livers show increases in cellular Src and ERK activity and redistribution of caveolin-1. Although activation of Src is not required in Na/K-ATPase-mediated regulation of cholesterol distribution, the interaction between the Na/K-ATPase and caveolin-1 is important for this regulation. Taken together, our new findings demonstrate a novel function of the Na/K-ATPase in control of the plasma membrane cholesterol distribution. Moreover, the data also suggest that the plasma membrane Na/K-ATPase-caveolin-1 interaction may represent an important sensing mechanism by which the cells regulate the sterol regulatory element-binding protein pathway.