Cholesterol accumulation in late endosomes is a prevailing phenotype of Niemann-Pick type C1 (NPC1) mutant cells. Likewise, annexin A6 (AnxA6) overexpression induces a phenotype reminiscent of NPC1 mutant cells. Here, we demonstrate that this cellular cholesterol imbalance is due to AnxA6 promoting Rab7 inactivation via TBC1D15, a Rab7-GAP. In NPC1 mutant cells, AnxA6 depletion and eventual Rab7 activation was associated with peripheral distribution and increased mobility of late endosomes. This was accompanied by an enhanced lipid accumulation in lipid droplets in an acyl-CoA:cholesterol acyltransferase (ACAT)-dependent manner. Moreover, in AnxA6-deficient NPC1 mutant cells, Rab7-mediated rescue of late endosome-cholesterol export required the StAR-related lipid transfer domain-3 (StARD3) protein. Electron microscopy revealed a significant increase of membrane contact sites (MCS) between late endosomes and ER in NPC1 mutant cells lacking AnxA6, suggesting late endosome-cholesterol transfer to the ER via Rab7 and StARD3-dependent MCS formation. This study identifies AnxA6 as a novel gatekeeper that controls cellular distribution of late endosome-cholesterol via regulation of a Rab7-GAP and MCS formation.