Recently, a new class of lipid-lowering agents has been described that upregulate LDL receptor (LDLr) activity. These agents are proposed to activate sterol-regulated gene expression through binding to the sterol regulatory element binding protein (SREBP) cleavage-activating protein (SCAP). Here, we show that the steroidal LDLr upregulator, GW707, induces accumulation of lysosomal free cholesterol and inhibits LDL-stimulated cholesterol esterification, similar to that observed in U18666A-treated cells and in Niemann-Pick type C1 (NPC1) mutants. Moreover, we demonstrate that induction of the NPC-like phenotype by GW707 is independent of SCAP function. We find that treatment with GW707 does not increase SREBP-dependent gene expression above that observed in lipoprotein-starved cells. Rather, we show that the apparent increase in SREBP-dependent activity in GW707-treated cells is attributable to a failure to appropriately suppress sterol-regulated gene expression, as has been shown previously for U18666A-treated cells and NPC mutant fibroblasts. We further demonstrate that cells treated with either GW707 or U18666A fail to appropriately generate 27-hydroxycholesterol in response to LDL cholesterol. Taken together, these findings support a mechanism in which GW707 exerts its hypolipidemic effects through disruption of late endosomal/lysosomal sterol trafficking and subsequent stimulation of LDLr activity.