This review traces the evolution of the 'Oxysterol Hypothesis', which was first formulated by Kandutsch and colleagues in 1978. The original hypothesis asserted that the suppressive effect of cholesterol on its own synthesis is mediated not by cholesterol itself, but by oxygenated forms of cholesterol, so called oxysterols. Subsequently, it has become clear that cholesterol plays a pivotal role in its own feedback regulation. However, recent findings have rekindled interest in oxysterols as potential physiological regulators of cholesterol homeostasis, in addition to drawing attention to other sterol regulators. Thus, certain oxysterols can suppress the activation of the master transcriptional regulators of lipid homeostasis (SREBPs) by binding to an oxysterol sensing protein in the Endoplasmic Reticulum (Insig). Some (oxy)sterols can accelerate the degradation of the key cholesterol biosynthetic enzyme, HMG-CoA reductase, and/or serve as natural ligand activators of a nuclear receptor (LXR) involved in coordinating many aspects of reverse cholesterol transport. Recent studies on endogenously produced oxysterols indicate that they may play a more subtle and acute role than originally envisaged, smoothing cholesterol responses in the short term. We also review the metabolism of oxysterols and other recent findings about oxysterols beyond a purely cholesterol homeostatic context, such as their proposed role in the Hedgehog development pathway.