Mutations in either of the two human Niemann-Pick type C (NPC) genes, NPC1 and NPC2, cause a fatal neurodegenerative disease associated with abnormal cholesterol accumulation in cells. npc1a, the Drosophila NPC1 ortholog, regulates sterol homeostasis and is essential for molting hormone (20-hydroxyecdysone; 20E) biosynthesis. While only one npc2 gene is present in yeast, worm, mouse and human genomes, a family of eight npc2 genes (npc2a-h) exists in Drosophila. Among the encoded proteins, Npc2a has the broadest expression pattern and is most similar in sequence to vertebrate Npc2. Mutation of npc2a results in abnormal sterol distribution in many cells, as in Drosophila npc1a or mammalian NPC mutant cells. In contrast to the ecdysteroid-deficient, larval-lethal phenotype of npc1a mutants, npc2a mutants are viable and fertile with relatively normal ecdysteroid level. Mutants in npc2b, another npc2 gene, are also viable and fertile, with no significant sterol distribution abnormality. However, npc2a; npc2b double mutants are not viable but can be rescued by feeding the mutants with 20E or cholesterol, the basic precursor of 20E. We conclude that npc2a functions redundantly with npc2b in regulating sterol homeostasis and ecdysteroid biosynthesis, probably by controlling the availability of sterol substrate. Moreover, npc2a; npc2b double mutants undergo apoptotic neurodegeneration, thus constituting a new fly model of human neurodegenerative disease.