COVID-19 is marked by extensive damage to the respiratory system, often accompanied by systemic manifestations, due to both viral cytopathic effects and hyperinflammatory syndrome. Therefore, the development of new therapeutic strategies or drug repurposing aiming to control virus replication and inflammation are required to mitigate the impact of the disease. Hydroxypropyl-beta-cyclodextrin (HP-BCD) is a cholesterol-sequestering agent with antiviral activity that has been demonstrated against enveloped viruses in in vitro and in vivo experimental models. We also demonstrated that HP-BCD has an immunomodulatory effect, inhibiting the production of selected proinflammatory cytokines induced by microbial products. Importantly, this drug has been used in humans for decades as an excipient in drug delivery systems and as a therapeutic agent in the treatment of Niemann pick C disease. The safety profile for this compound is well established. Here, we investigated whether HP-BCD would affect SARS-CoV-2 replication and virus-induced inflammatory response, using established cell lines and primary human cells. Treating virus or cells with HP-BCD significantly inhibited SARS-CoV-2 replication with a high selective index. A broad activity against distinct SARS-CoV-2 variants was evidenced by a remarkable reduction in the release of infectious particles. The drug did not alter ACE2 surface expression, but affected cholesterol accumulation into intracellular replication complexes, lowering virus RNA and protein levels, and reducing virus-induced cytopathic effects. Virus replication was also impaired by HP-BCD in Calu-3 pulmonary cell line and human primary monocytes, in which not only the virus, but also the production of proinflammatory cytokines were significantly inhibited. Given the pathophysiology of COVID-19 disease, these data indicate that the use HP-BCD, which inhibits both SARS-CoV2 replication and production of proinflammatory cytokines, as a potential COVID-19 therapeutic warrants further investigation.