Nonalcoholic steatohepatitis (NASH) is a major threat to health worldwide. Lipotoxicity and macrophage-mediated inflammation play key roles in the pathogenesis of NASH. In this study, we found that individuals with higher serum LDL-C levels have a higher prevalence of nonalcoholic fatty liver disease (NAFLD) and elevated levels of glutamic-pyruvic transaminase, glutamic-oxalacetic transaminase and alkaline phosphatase. A logistic regression analysis revealed that serum LDL-C level is an independent risk factor for the prevalence and prognosis of NAFLD. In vitro, we used ox-LDL and MβCD-cholesterol to treat Huh7 cells and found that cholesterol loading reduced lysosomal quantity and impaired lysosomal acidification, reducing the number of multivesicular bodies (MVBs) colocalizing with lysosomes. The bafilomycin A1 inhibition of lysosomal function also inhibited lysosomal MVBs degradation, promoting the release of exosomes from the Huh7 cells. Next, we found that cholesterol loading promoted exosome release from the Huh7 cells. The exosomes from the cholesterol-loaded cells increased the ratio of the THP-1 cells positive for the M1 marker (iNOS-1) without affecting the ratio of the cells positive for the M2 marker (CD206). Moreover, an elevated level of miR-122-5p was observed in exosomes derived from the Huh7 cells loaded with cholesterol. While the miR-122-5p mimics promoted THP-1 M1 polarization, downregulating miR-122-5p in the Huh7 cells inhibited the exosome-induced activation of macrophages and macrophage-related inflammation. These findings suggest that cholesterol plays an important role in the development and progression of NASH. Cholesterol-induced lysosomal dysfunction increases exosome release from hepatocytes, resulting in M1 polarization and macrophage-induced inflammation in a miR-122-5p-dependent manner.