Unbiased genetic screens implicated a number of uncharacterized genes in hearing loss, suggesting some biological processes required for auditory function remain unexplored. Loss of Kiaa1024L/Minar2, a previously understudied gene, caused deafness in mice, but how it functioned in hearing was unclear. Here we show that disruption of kiaa1024L/minar2 causes hearing loss in the zebrafish. Defects in mechanotransduction, longer and thinner hair bundles, and enlarged apical lysosomes in hair cells are observed in kiaa1024L/minar2 mutant. In cultured cells, Kiaa1024L/Minar2 is mainly localized to lysosomes and its overexpression recruits cholesterol and increases cholesterol labeling. Strikingly, an accessible pool of cholesterol is highly enriched in the hair bundle membrane, and loss of kiaa1024L/minar2 reduces cholesterol localization to the hair bundles. Decreasing cholesterol levels aggravates, while increasing cholesterol levels rescues hair cell defects in kiaa1024L/minar2 mutant. Therefore cholesterol plays an essential role in the hair bundles, and Kiaa1024L/Minar2 regulates cholesterol distribution and homeostasis to ensure normal hearing.