Loss of cholesterol homeostasis and altered vesicle trafficking have been detected in Huntington's disease (HD) cellular and animal models, yet the role of these dysfunctions in pathophysiology of HD is unknown. We demonstrate here that defects in caveolar-related cholesterol trafficking directly contribute to the mechanism of HD in vivo. We generated new mouse models that express mutant Huntington's protein (mhtt), but have partial or total loss of caveolin-1 (Cav1) expression. Fluorescence resonance energy transfer dequenching confirms a direct interaction between mhtt and Cav1. Mhtt-expressing neurons exhibited cholesterol accumulation and suppressed caveolar-related post-Golgi trafficking from endoplasmic reticulum/Golgi to plasma membrane. Loss or reduction of Cav1 expression in a knock-in HD mouse model rescues the cholesterol phenotype in neurons and significantly delays the onset of motor decline and development of neuronal inclusions. We propose that aberrant interaction between Cav1 and mhtt leads to altered cholesterol homeostasis and plays a direct causative role in the onset of HD pathophysiology in vivo.