The role of lysosomes in acetaminophen (APAP) hepatotoxicity is poorly understood. Here, we investigated the impact of genetic and drug-induced lysosomal cholesterol (LC) accumulation in APAP hepatotoxicity. Acid sphingomyelinase (ASMase)(-/-) mice exhibit LC accumulation and higher mortality after APAP overdose compared to ASMase(+/+) littermates. ASMase(-/-) hepatocytes display lower threshold for APAP-induced cell death and defective fusion of mitochondria-containing autophagosomes with lysosomes, which decreased mitochondrial quality control. LC accumulation in ASMase(+/+) hepatocytes caused by U18666A reproduces the susceptibility of ASMase(-/-) hepatocytes to APAP and the impairment in the formation of mitochondria-containing autolysosomes. LC extraction by 25-hydroxycholesterol increased APAP-mediated mitophagy and protected ASMase(-/-) mice and hepatocytes against APAP hepatotoxicity, effects that were reversed by chloroquine to disrupt autophagy. The regulation of LC by U18666A or 25-hydroxycholesterol did not affect total cellular sphingomyelin content or its lysosomal distribution. Of relevance, amitriptyline-induced ASMase inhibition in human hepatocytes caused LC accumulation, impaired mitophagy and increased susceptibility to APAP. Similar results were observed upon glucocerebrosidase inhibition by conduritol β-epoxide, a cellular model of Gaucher disease. These findings indicate that LC accumulation determines susceptibility to APAP hepatotoxicity by modulating mitophagy, and imply that genetic or drug-mediated ASMase disruption sensitizes to APAP-induced liver injury.