Niemann-Pick disease type C (NPC) is a lysosomal storage disease characterized by abnormal accumulation of free cholesterol and glycolipids. Here, we established induced pluripotent stem cell (iPSC) lines from NPC patients. Hepatocyte-like cells (HLCs) and neural progenitors derived from the iPSC lines accumulated cholesterol and displayed impaired autophagy and ATP production. A molecular signature related to lipid metabolism was also impaired in the NPC-iPSC-derived HLCs. These findings indicate that iPSC-derived cells can phenocopy human NPC. We also newly found that 2-hydroxypropyl-γ-cyclodextrin (HPGCD) could reduce the cholesterol accumulation and restore the functional and molecular abnormalities in the NPC patient-derived cells, and do so more effectively than 2-hydroxypropyl-β-cyclodextrin treatment. In addition, NPC model mice showed an improved liver status and prolonged survival with HPGCDs. Thus, iPSC lines derived from patient cells are powerful tools to study cellular models of NPC, and HPGCD is a potential new drug candidate for future treatment of this disease.