Cerebrotendinous xanthomatosis (CTX) is a rare autosomal recessive disease, caused by genetic deficiency of the 27-hydroxylase enzyme (encoded by CYP27A1). It plays a key role in cholesterol metabolism, especially in bile acid synthesis and in the 25-hydroxylation of vitamin D3 in the liver. Its deficiency causes reduced bile acid synthesis and tissue accumulation of cholestanol. Clinical manifestations are related to the presence of cholestanol deposits and include tendon xanthomas, premature cataracts, chronic diarrhea, progressive neurologic impairment and less frequently coronary heart disease, early onset osteoporosis and abnormalities in the optic disk and retina. An early diagnosis and treatment with quenodeoxycholic acid may prevent further complications, mainly neurological manifestations. This review summarizes cholesterol metabolism related to bile acid synthesis, physiopathology, biochemistry and treatment of cerebrotendinous xanthomatosis.