The mechanisms by which genomic risks contribute to the onset of neuropsychiatric conditions remain a key challenge and a prerequisite for successful development of effective therapies. 15q11.2 copy number variation (CNV) containing the CYFIP1 gene is associated with autism and schizophrenia. Using stem cell models, we show that 15q11.2 deletion (15q11.2del) and CYFIP1 loss of function (CYFIP1-LoF) lead to premature neuronal differentiation, while CYFIP1 gain of function (CYFIP1-GoF) favors neural progenitor maintenance. CYFIP1 dosage changes led to dysregulated cholesterol metabolism and altered levels of 24S,25-epoxycholesterol, which can mimic the 15q11.2del and CYFIP1-LoF phenotypes by promoting cortical neuronal differentiation and can restore the impaired neuronal differentiation of CYFIP1-GoF neural progenitors. Moreover, the neurogenic activity of 24S,25-epoxycholesterol is lost following genetic deletion of liver X receptor (LXRβ), while compound deletion of LXRβ in CYFIP1-/- background rescued their premature neurogenesis. This work delineates LXR-mediated oxysterol regulation of neurogenesis as a pathological mechanism in neural cells carrying 15q11.2 CNV and provides a potential target for therapeutic strategies for associated disorders.