The human stomatin-like protein-1 (SLP-1) is a membrane protein with a characteristic bipartite structure containing a stomatin domain and a sterol carrier protein-2 (SCP-2) domain. This structure suggests a role for SLP-1 in sterol/lipid transfer and transport. Because SLP-1 has not been investigated, we first studied the molecular and cell biological characteristics of the expressed protein. We show here that SLP-1 localizes to the late endosomal compartment, like stomatin. Unlike stomatin, SLP-1 does not localize to the plasma membrane. Overexpression of SLP-1 leads to the redistribution of stomatin from the plasma membrane to late endosomes suggesting a complex formation between these proteins. We found that the targeting of SLP-1 to late endosomes is caused by a GYXXPhi (Phi being a bulky, hydrophobic amino acid) sorting signal at the N terminus. Mutation of this signal results in plasma membrane localization. SLP-1 and stomatin co-localize in the late endosomal compartment, they co-immunoprecipitate, thus showing a direct interaction, and they associate with detergent-resistant membranes. In accordance with the proposed lipid transfer function, we show that, under conditions of blocked cholesterol efflux from late endosomes, SLP-1 induces the formation of enlarged, cholesterol-filled, weakly LAMP-2-positive, acidic vesicles in the perinuclear region. This massive cholesterol accumulation clearly depends on the SCP-2 domain of SLP-1, suggesting a role for this domain in cholesterol transfer to late endosomes.