We have previously established that the ABCA1 transporter, which plays a critical role in the lipidation of extracellular apolipoprotein acceptors, traffics between late endocytic vesicles and the cell surface (Neufeld, E. B., Remaley, A. T., Demosky, S. J., Jr., Stonik, J. A., Cooney, A. M., Comly, M., Dwyer, N. K., Zhang, M., Blanchette-Mackie, J., Santamarina-Fojo, S., and Brewer, H. B., Jr. (2001) J. Biol. Chem. 276, 27584-27590). The present study provides evidence that ABCA1 in late endocytic vesicles plays a role in cellular lipid efflux. Late endocytic trafficking was defective in Tangier disease fibroblasts that lack functional ABCA1. Consistent with a late endocytic protein trafficking defect, the hydrophobic amine U18666A retained NPC1 in abnormally tubulated, cholesterol-poor, Tangier disease late endosomes, rather than cholesterol-laden lysosomes, as in wild type fibroblasts. Consistent with a lipid trafficking defect, Tangier disease late endocytic vesicles accumulated both cholesterol and sphingomyelin and were immobilized in a perinuclear localization. The excess cholesterol in Tangier disease late endocytic vesicles retained massive amounts of NPC1, which traffics lysosomal cholesterol to other cellular sites. Exogenous apoA-I abrogated the cholesterol-induced retention of NPC1 in wild type but not in Tangier disease late endosomes. Adenovirally mediated ABCA1-GFP expression in Tangier disease fibroblasts corrected the late endocytic trafficking defects and restored apoA-I-mediated cholesterol efflux. ABCA1-GFP expression in wild type fibroblasts also reduced late endosome-associated NPC1, induced a marked uptake of fluorescent apoA-I into ABCA1-GFP-containing endosomes (that shuttled between late endosomes and the cell surface), and enhanced apoA-I-mediated cholesterol efflux. The combined results of this study suggest that ABCA1 converts pools of late endocytic lipids that retain NPC1 to pools that can associate with endocytosed apoA-I, and be released from the cell as nascent high density lipoprotein.