In mammalian cells, cholesterol is thought to associate with sphingolipids to form lateral membrane domains termed rafts. Increasing evidence suggests that rafts regulate protein interactions, for example, during signalling, intracellular transport and host-pathogen interactions. Rafts are present in cholesterol-sphingolipid-enriched membranes, including early and recycling endosomes, but whether rafts are found in late endocytic organelles has not been analyzed. In this study, we analyzed the association of cholesterol and late endosomal proteins with low-density detergent-resistant membranes (DRMs) in normal cells and in cells with lysosomal cholesterol-sphingolipid accumulation. In normal cells, the majority of [(3)H]cholesterol released from [(3)H]cholesterol ester-LDL associated with detergent-soluble membranes, was rapidly transported to the plasma membrane and became increasingly insoluble with time. In Niemann-Pick C1 (NPC1) protein-deficient lipidosis cells, the association of LDL-cholesterol with DRMs was enhanced and its transport to the plasma membrane was inhibited. In addition, the NPC1 protein was normally recovered in detergent-soluble membranes and its association with DRMs was enhanced by lysosomal cholesterol loading. Moreover, lysosomal cholesterol deposition was kinetically paralleled by the sequestration of sphingolipids and formation of multilamellar bodies in late endocytic organelles. These results suggest that late endocytic organelles are normally raft-poor and that endocytosed LDL-cholesterol is efficiently recycled to the plasma membrane in an NPC1-dependent process. The cholesterol-sphingolipid accumulation characteristic to NPC disease, and potentially to other sphingolipidoses, causes an overcrowding of rafts forming lamellar bodies in the degradative compartments.