Cholesterol is one of the most essential membrane components in mammalian cells and plays a critical role in several cellular functions. It is now established that intracellular cholesterol transport contributes to the regulation of cellular cholesterol homeostasis by mechanisms that are yet poorly defined. In this study, we examined the role of clathrin- and dynamin-dependent trafficking on the regulatory machinery involved in cholesterol homeostasis. Thus, expression levels of three major sterol-sensitive genes, that is sterol-regulatory element binding protein 2 (SREBP-2), hydroxymethylglutaryl-coenzyme A (HMGCoA) reductase and low-density lipoprotein (LDL) receptor, were monitored to study the cell response to the addition of LDL-derived cholesterol. We found that inhibition of clathrin-dependent endocytosis had no effect on the intracellular distribution of cholesterol and the regulation of sterol-sensitive genes. In contrast, inhibition of dynamin activity resulted in the lack of regulation of SREBP-2, HMGCoA reductase and LDL receptor genes. Immunolocalization studies along with the measure of free and esterified cholesterol indicated that dynamin inactivation led to the accumulation of free cholesterol (FC) within the late endosomal (LE)/lysosomal compartment resulting in insufficient delivery of regulatory cholesterol to the endoplasmic reticulum (ER) where the transcriptional control of sterol-sensitive genes occurs. Our data therefore indicate that dynamin plays a critical role in the delivery of cholesterol from the LE/lysosomal network to the ER and highlight the importance of LE trafficking in cholesterol homeostasis.