BackgroundNiemann–Pick disease type C (NPC) is a fatal neurodegenerative disorder caused by abnormal intracellular cholesterol trafficking. Cyclodextrins (CDs), the most promising therapeutic candidates for NPC, but with concerns about ototoxicity, are cyclic oligosaccharides with dual functions of unesterified cholesterol (UC) shuttle and sink that catalytically enhance the bidirectional flux and net efflux of UC, respectively, between the cell membrane and the extracellular acceptors. However, the properties of CDs that regulate these functions and how they could be used to improve treatments for NPC are unclear.MethodsWe estimated CD–UC complexation for nine CD derivatives derived from native α‐, β‐, and γ‐CD with different cavity sizes, using solubility and molecular docking analyses. The stoichiometry and complexation ability of the resulting complexes were investigated in relation to the therapeutic effectiveness and toxicity of each CD derivative in NPC experimental models.FindingsWe found that shuttle and sink activities of CDs are dependent on cavity size‐dependent stoichiometry and substituent‐associated stability of CD–UC complexation. The ability of CD derivatives to form 1:1 and 2:1 complexes with UC were correlated with their ability to normalize intracellular cholesterol trafficking serving as shuttle and with their cytotoxicity associated with cellular UC efflux acting as sink, respectively, in NPC model cells. Notably, the ability of CD derivatives to form an inclusion complex with UC was responsible for not only efficacy but ototoxicity, while a representative derivative without this ability negligibly affected auditory function, underscoring its preventability.ConclusionsOur findings highlight the importance of strategies for optimizing the molecular structure of CDs to overcome this functional dilemma in the treatment of NPC.