Niemann-Pick type C (NPC) disease is a fatal recessively inherited lysosomal cholesterol-sphingolipidosis. Mutations in the NPC1 gene cause approximately 95% of the cases, the rest being caused by NPC2 mutations. Here the molecular basis of a severe infantile form of the disease was dissected. The level of NPC1 protein in the patient fibroblasts was similar to that in control cells. However, the protein was partially mislocalized from late endocytic organelles diffusely to the cell periphery. In contrast, NPC2 was upregulated and accumulated in cholesterol storing late endocytic organelles. Two point mutations and a four-nucleotide deletion were identified in the NPC1 gene, leading to the amino acid substitutions C113R, P237S and deletion of 37 C-terminal amino acids (delC). Overexpression of individual NPC1 mutations revealed that delC produced an unstable protein, wild-type and NPC1-P237S colocalized with Rab7-positive late endosomes whereas NPC1-C113R localized to the ER, Rab7-negative endosomes and the cell surface. Expression of wild-type or NPC1-P237S cleared the lysosomal cholesterol accumulation in NPC1-deficient cells whereas C113R or delC did not. In the Finnish and Swedish population samples, alleles carrying C113R or delC were not identified, whereas approximately 5% of the alleles carried P237S. Our studies identify P237S as a prevalent NPC1 polymorphism and delC and C113R as deleterious NPC1 mutations. Moreover, they show that delC leads to rapid degradation of NPC1 and C113R to endocytic missorting of the protein. These changes are accompanied by lysosomal accumulation of NPC2, suggesting that NPC1 governs the endocytic transport of NPC2.