Substitution mutations in adjacent amino acids of the N-terminal domain of NPC1, a lysosomal membrane protein, abolish its cholesterol binding activity and impair its ability to export cholesterol from lysosomes of cultured cells lacking npc1 [Kwon HJ, et al. (2009) Cell 137:1213-1224]. Here, we show that the same two mutations (proline-202 and phenylalanine-203, both changed to alanine) reproduce the phenotype of complete NPC1 deficiency when knocked into the mouse npc1 gene by homologous recombination. Homozygous npc1(pf/pf) mice exhibited neurodegeneration beginning at day 49 and died at a median age of 84 d, as previously reported for mice that lack npc1. Liver and other organs of the npc1(pf/pf) mice accumulated excess cholesterol in lysosomes. In liver, mRNAs encoding several lysosomal proteins were elevated, including NPC1 and NPC2 and several digestive enzymes (acid lipase, β-glucuronidase, and cathepsins B and D). Weekly treatment with hydroxypropyl-β-cyclodextrin (HPCD) beginning at 7 wk reduced hepatic cholesterol accumulation and diminished the lysosomal mRNAs. We conclude that the cholesterol binding site in the N-terminal domain of NPC1 is essential for cholesterol export from lysosomes in living animals as it is in cultured cells. The HPCD-mediated reduction of excess lysosomal enzymes may contribute to the ability of this drug to delay the progression of NPC disease in mice.