Niemann-Pick type C disease is an inherited fatal disorder characterized by the accumulation of unesterified cholesterol and other lipids in the endosomal/lysosomal compartment. Two independent genes responsible for this neurodegenerative disorder have been identified, but the precise functions of the encoded Niemann-Pick C1 (NPC1) and C2 (NPC2) proteins are not yet known. We developed a cell-free assay for measuring intermembrane lipid transport and examined the ability of bovine NPC2 (bNPC2) for intermembrane cholesterol transfer. NPC2 specifically extracts cholesterol from phospholipid bilayers and catalyzes intermembrane transfer to acceptor vesicles in a dose- and time-dependent manner. This transfer activity is dependent on temperature, pH, ionic strength, lipid composition of the model membranes, and the ratio of donor to acceptor vesicles. In model membranes, the presence of the lysosomal anionic phospholipids bis(monooleoylglycero)phosphate and phosphatidyl inositol significantly stimulated cholesterol transfer by NPC2, whereas bis(monomyristoylglycero)phosphate, phosphatidyl serine, and phosphatidic acid had no effect. Moreover, ceramide stimulated cholesterol transfer slightly, whereas sphingomyelin reduced cholesterol transfer rates. With our assay system we identified for the first time the ability of other lysosomal proteins, most notably the GM2-activator protein, to mediate intermembrane cholesterol transfer. This assay system promises to be a valuable tool for further quantitative and mechanistic studies of protein-mediated lipid transfer.