The removal of cholesterol from lipid obtained from Pacific white shrimp (Litopenaeus vannamei) cephalothorax using saponin in conjunction with celite under various conditions is investigated. Various lipid:saponin ratios (1:2, 1:4, and 1:6, W/W) with different lipid:solvent ratios (1:20, 1:40, and 1:80, W/V) are employed with a treatment time of 4 h. The highest cholesterol removal (88.77 ± 0.18%) is obtained with a lipid:saponin ratio of 1:6 and 20 volumes of 50% ethanol. As the treatment time is increased from 1 to 4 h, higher cholesterol removal is achieved. Lipid peroxides and conjugated dienes are higher in the lipid after cholesterol removal compared to untreated lipid, while thiobarbituric acid reactive substances, the ρ‐anisidine value and free fatty acids are reduced. However, the polyunsaturated fatty acid (PUFA) content in the saponin‐treated lipid (18.06 ± 0.37 g/100 g−1) is higher than that of untreated lipid (15.80 ± 0.17 g/100 g−1). FTIR spectra confirmed the formation of hydroperoxides, with lower aldehyde, phospholipid and free fatty acid contents in the cholesterol‐removed lipid. The process developed employing saponin is able to produce crude shrimp lipid with a pronounced decrease in cholesterol, but augmented PUFAs, especially eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA).Practical Applications: Shrimp lipid is a vital byproduct capable of extraction from cephalothorax. Due to the presence of astaxanthin, EPA and DHA, shrimp lipid is considered to be a highly useful nutraceutical product. However, the cholesterol content of shrimp lipid is a major constraint on its human consumption. The negative impact of cholesterol content can be overcome by lowering the cholesterol content. Saponin treatment of shrimp lipid is able to reduce the cholesterol level and increase the PUFA, thus solving the high cholesterol problem and also gaining augmented health benefits.