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Cholesterol, a crucial component of cell membranes, influences various biological processes, including membrane trafficking, signal transduction, and host-pathogen interactions. Disruptions in cholesterol homeostasis have been linked to congenital and acquired conditions, including neurodegenerative disorders such as Alzheimer’s disease (AD). Previous research from our group has demonstrated that herpes simplex virus type I (HSV-1) induces an AD-like phenotype in several cell models of infection. This study explores the interplay between cholesterol and HSV-1-induced neurodegeneration. The impact of cholesterol was determined by modulating its levels with methyl-beta-cyclodextrin (MβCD) using the neuroblastoma cell lines SK-N-MC and N2a. We have found that HSV-1 infection triggers the intracellular accumulation of cholesterol in structures resembling endolysosomal/autophagic compartments, a process reversible upon MβCD treatment. Moreover, MβCD exhibits inhibitory effects at various stages of HSV-1 infection, underscoring the importance of cellular cholesterol levels, not only in the viral entry process but also in subsequent post-entry stages. MβCD also alleviated several features of AD-like neurodegeneration induced by viral infection, including lysosomal impairment and intracellular accumulation of amyloid-beta peptide (Aβ) and phosphorylated tau. In conclusion, these findings highlight the connection between cholesterol, neurodegeneration, and HSV-1 infection, providing valuable insights into the underlying mechanisms of AD.