The lipid droplet (LD) is the major site of cholesterol storage in macrophage foam cells and is a potential therapeutic target for the treatment of atherosclerosis. Cholesterol, stored as cholesteryl esters (CEs), is liberated from this organelle and delivered to cholesterol acceptors. The current paradigm attributes all cytoplasmic CE hydrolysis to the action of neutral CE hydrolases. Here, we demonstrate an important role for lysosomes in LD CE hydrolysis in cholesterol-loaded macrophages, in addition to that mediated by neutral hydrolases. Furthermore, we demonstrate that LDs are delivered to lysosomes via autophagy, where lysosomal acid lipase (LAL) acts to hydrolyze LD CE to generate free cholesterol mainly for ABCA1-dependent efflux; this process is specifically induced upon macrophage cholesterol loading. We conclude that, in macrophage foam cells, lysosomal hydrolysis contributes to the mobilization of LD-associated cholesterol for reverse cholesterol transport.