This study sought to assess the cholesterol-lowering activity of peptides obtained from milk casein hydrolyzed with neutrase. The bioactive peptides were separated using a Sephadex G-10 chromatographic column (Amersham Pharmacia Biotech, Uppsala, Sweden) after ultrafiltration using a 1-kDa molecular mass cutoff membrane. Via ultra-performance liquid chromatography-electrospray ionization-tandem mass spectrometry, we determined that peptides Thr-Asp-Val-Glu-Asn [TDVEN; β-casein f(143-147)], Leu-Gln-Pro-Glu [LQPE; β-casein f(103-106)], Val-Ala-Pro-Phe-Pro-Glu [VAPFPE; αS1-casein f(40-45)], and Val-Leu-Pro-Val-Pro-Gln [VLPVPQ β-casein f(185-190)] reduced micellar cholesterol solubility. After Caco-2 cells were treated with LQPE, VLPVPQ, and VAPFPE, the Niemann-Pick C1-Like 1 (NPC1L1) protein levels decreased by (means ± SEM) 19.33 ± 2.47%, 52.1 ± 3.77%, and 23.09 ± 8.52%, respectively, compared with the control group. Treatment with each peptide induced significant upregulation of ATP binding cassette subfamily G member 8 antibody (ABCG8) mRNA expression by 398.1 ± 23.27%, 86.4 ± 27.07%, and 92.8 ± 8.49%. We found that VLPVPQ and LQPE significantly upregulated ATP-binding cassette transporter A1 (ABCA1) transcription by 203.9 ± 8.44% and 220.8 ± 36.42% respectively, whereas VLPVPQ significantly decreased mRNA expression of acetyl-CoA-acetyltransferase 2 (ACAT2) and microsomal triacylglycerols (MTP). The cholesterol-lowering action of milk-derived peptides may be induced by suppression of micellar cholesterol solubility and affects the expression of cholesterol absorption-related proteins and enzymes in intestinal epithelial cells. This research discovers new milk-derived peptides with decreasing cholesterol micellar solubility and provides a theoretical basis of in vitro cholesterol-lowering effects of peptides.