This study investigated how NPC1L1, a cholesterol transporter, regulates osteogenic differentiation through cholesterol metabolism independently of its transport function. We also explored the role of NPC1L1 in osteoporosis (OP), focusing on the downstream C/EBPα/Cyp27a1/27-hydroxycholesterol (27-OHC) axis. High-throughput RNA sequencing and bioinformatics analysis identified NPC1L1 as a key regulator of osteogenesis. Osteogenic differentiation assays, Alizarin Red S and ALP staining, western blot analysis, and qRT-PCR were performed using osteoblast cell lines (C3H10 and C2C12). In addition, an ovariectomy (OVX)-induced mouse model of OP was established to validate the in vivo effects. ELISAs, chromatin immunoprecipitation (ChIP-qPCR), and rescue experiments were conducted to verify the functional interactions among NPC1L1, Cyp27a1, 27-OHC production, and the transcription factor C/EBPα. NPC1L1 expression was downregulated during osteogenesis, and its knockdown significantly enhanced osteogenic differentiation, proliferation, and migration. At the molecular level, NPC1L1 promoted cholesterol metabolism independently of its transport function, resulting in elevated 27-OHC levels through increased expression of Cyp27a1. Elevated 27-OHC suppressed osteogenesis through the induction of oxidative stress and the downregulation of osteogenic biomarkers (ALP, OPN, OSX, and OCN). In OVX mice, NPC1L1 knockdown significantly reversed osteoporosis-related bone loss, as evidenced by improved trabecular parameters (BV/TV%, Tb.Th, Tb.N). Furthermore, we identified C/EBPα as a transcriptional activator of Cyp27a1, which mediates the regulatory effects of NPC1L1 on 27-OHC production. NPC1L1 inhibits osteogenesis and contributes to OP by promoting the Cyp27a1-dependent synthesis of 27-OHC through the transcription factor C/EBPα. Targeted modulation of the NPC1L1-C/EBPα-Cyp27a1-27-OHC axis could provide novel therapeutic strategies for OP.