Hedgehog (Hh) signaling is essential during development and in organ physiology. In the canonical pathway, Hh binding to Patched (PTCH) relieves the inhibition of Smoothened (SMO). Yet, PTCH may also perform SMO-independent functions. While the PTCH homolog PTC-3 is essential in C. elegans, worms lack SMO, providing an excellent model to probe non-canonical PTCH function. Here, we show that PTC-3 is a cholesterol transporter. ptc-3(RNAi) leads to accumulation of intracellular cholesterol and defects in ER structure and lipid droplet formation. These phenotypes were accompanied by a reduction in acyl chain (FA) length and desaturation. ptc-3(RNAi)-induced lethality, fat content and ER morphology defects were rescued by reducing dietary cholesterol. We provide evidence that cholesterol accumulation modulates the function of nuclear hormone receptors such as of the PPARα homolog NHR-49 and NHR-181, and affects FA composition. Our data uncover a role for PTCH in organelle structure maintenance and fat metabolism.