Cholesterol is a multifaceted molecule, which serves as essential membrane component, as cofactor for signaling molecules and as precursor for steroid hormones. Consequently, defects in cholesterol metabolism cause devastating diseases. So far, the role of cholesterol in the nervous system is less well understood. Recent studies showed that cultured neurons from the mammalian central nervous system (CNS) require glia-derived cholesterol to form numerous and efficient synapses. This suggests that the availability of cholesterol in neurons limits the extent of synaptogenesis. Here, I will summarize the experimental evidence for this hypothesis, describe what is known about the structural and functional role of cholesterol at synapses, and discuss how cholesterol may influence synapse development and stability.