Cholesterol metabolites are abundant in the central nervous system (CNS) that regulate cell membrane fluidity, signal transduction, and inter- and intracellular vesicular transport, as well as cell proliferation/cell death or migration. Brain cholesterol synthesis and metabolism are tightly coupled to the functional homeostasis of neurons, glial cells or microglia, and dysregulation of these processes has been strongly implicated in neurodegenerative diseases such as Alzheimer's disease (AD), Parkinson's disease (PD), and Huntington's disease (HD). This review provides a comprehensive overview of how cholesterol synthesis, esterification, efflux, uptake, and oxidation affect the CNS function, highlighting the function of key enzymes or metabolites in distinct brain cell types during neurodegeneration. Based on single-cell/nucleus RNA sequencing data from the brains of AD, PD, and HD patients, we summarize cell-type-specific genes in cholesterol metabolism pathways, shedding new light to understand cellular heterogeneity. The role of cholesterol-derived neurosteroids in neurodegenerative diseases is also discussed. Furthermore, how cholesterol metabolites modulate the formation, aggregation, and degradation of amyloid-β (Aβ), α-synuclein and huntingtin, as well as Tau protein phosphorylation are outlined. Finally, future research directions are proposed that aim to understand neurodegenerative diseases with new angle.