Cholesterol crystals (CCs) were first discovered in atherosclerotic plaque tissue in the early 1900 and have since been observed and implicated in many diseases and conditions, including myocardial infarction, abdominal aortic aneurism, kidney disease, ocular diseases, and even central nervous system anomalies. Despite the widespread involvement of CCs in many pathologies, the mechanisms involved in their formation and their role in various diseases are still not fully understood. Current knowledge concerning the formation of CCs, as well as the molecular pathways activated upon cellular exposure to CCs, will be explored in this review. As CC formation is tightly associated with lipid metabolism, the role of cellular lipid homeostasis in the formation of CCs is highlighted, including the role of lysosomes. In addition, cellular pathways and processes known to be affected by CCs are described. In particular, CC‐induced activation of the inflammasome and production of reactive oxygen species, along with the role of CCs in complement‐mediated inflammation is discussed. Moreover, the clinical manifestation of embolized CCs is described with a focus on renal and skin diseases associated with CC embolism. Lastly, potential therapeutic measures that target either the formation of CCs or their impact on different cell types and tissues are highlighted.