The conserved Rieske oxygenase DAF-36/Neverland is a novel cholesterol-metabolizing enzyme.  Steroid hormones play essential roles in a wide variety of biological processes in multicellular organisms. The principal steroid hormones in nematodes and arthropods are dafachronic acids and ecdysteroids, respectively, both of which are synthesized from cholesterol as an indispensable precursor. The first critical catalytic step in the biosynthesis of these ecdysozoan steroids is the conversion of cholesterol to 7-dehydrocholesterol. However, the enzymes responsible for cholesterol 7,8-dehydrogenation remain unclear at the molecular level. Here we report that the Rieske oxygenase DAF-36/Neverland (Nvd) is a cholesterol 7,8-dehydrogenase. The daf-36/nvd genes are evolutionarily conserved, not only in nematodes and insects but also in deuterostome species that do not produce dafachronic acids or ecdysteroids, including the sea urchin Hemicentrotus pulcherrimus, the sea squirt Ciona intestinalis, the fish Danio rerio, and the frog Xenopus laevis. An in vitro enzymatic assay system reveals that all DAF-36/Nvd proteins cloned so far have the ability to convert cholesterol to 7-dehydrocholesterol. Moreover, the lethality of loss of nvd function in the fruit fly Drosophila melanogaster is rescued by the expression of daf-36/nvd genes from the nematode Caenorhabditis elegans, the insect Bombyx mori, or the vertebrates D. rerio and X. laevis. These data suggest that daf-36/nvd genes are functionally orthologous across the bilaterian phylogeny. We propose that the daf-36/nvd family of proteins is a novel conserved player in cholesterol metabolism across the animal phyla.