We have reported that α1 Na/K-ATPase regulates the trafficking of caveolin-1 and consequently alters cholesterol distribution in the plasma membrane. Here, we report the reciprocal regulation of α1 Na/K-ATPase by cholesterol. Acute exposure of LLC-PK1 cells to methyl β-cyclodextrin led to parallel decreases in cellular cholesterol and the expression of α1 Na/K-ATPase. Cholesterol repletion fully reversed the effect of methyl β-cyclodextrin. Moreover, inhibition of intracellular cholesterol trafficking to the plasma membrane by compound U18666A had the same effect on α1 Na/K-ATPase. Similarly, the expression of α1, but not α2 and α3, Na/K-ATPase was significantly reduced in the target organs of Niemann-Pick type C mice where the intracellular cholesterol trafficking is blocked. Mechanistically, decreases in the plasma membrane cholesterol activated Src kinase and stimulated the endocytosis and degradation of α1 Na/K-ATPase through Src- and ubiquitination-dependent pathways. Thus, the new findings, taken together with what we have already reported, revealed a previously unrecognized feed-forward mechanism by which cells can utilize the Src-dependent interplay among Na/K-ATPase, caveolin-1, and cholesterol to effectively alter the structure and function of the plasma membrane.