<p>White matter repair relies on microglial clearance of cholesterol-rich myelin debris. Microglia have been reported to predominantly depend on de novo sterol synthesis to support this repair process. Lysosomal acid lipase (LAL) is the only known lysosomal enzyme capable of hydrolyzing cholesterol esters. In stark contrast to previous studies, we demonstrate here that LAL-mediated lysosomal lipolysis—not de novo sterol synthesis—serves as a central determinant of the microglial capacity to drive white matter repair. Using single-cell RNA sequencing, we identified a novel reparative microglial state characterized by simultaneously high expression of glycoprotein nonmetastatic melanoma protein B (GPNMB) and LAL. Following white matter injury, GPNMB⁺ microglia expanded and constituted the major microglial subset responsible for myelin debris engulfment. However, GPNMB⁺ microglia displayed context-dependent capacity to digest internalized myelin debris and mediate remyelination, with marked differences between reparable white matter injury and nonregenerative injury induced by white matter stroke (WMS). Transcriptomic profiling identified LAL as a key regulator of the reparative phenotype in GPNMB⁺ microglia. Independent of cytosolic lipases—widely regarded as synergistic mediators of LAL in cholesteryl ester hydrolysis, microglial LAL was both indispensable for myelin debris clearance and spontaneous remyelination in the reparable injury model, and sufficient to restore these processes following WMS-induced irreparable white matter injury. Mechanistically, LAL-mediated lysosomal lipolysis constituted the primary pathway for cholesteryl ester hydrolysis in microglia after white matter injury. This pathway converted cholesteryl esters into free cholesterol and activates liver X receptors (LXRs), both of which were required to reprogram microglial into the reparative state. Consistently, LXR activation alone was insufficient to rescue defective white matter repair caused by LAL deficiency. Hydroxypropyl-β-cyclodextrin (HβCD), an FDA-approved drug carrier, effectively lowers intracellular cholesterol levels through incompletely defined mechanisms. HβCD specifically upregulated LAL expression within white matter lesions and promoted remyelination via a LAL-dependent manner following WMS, supporting its potential as a therapeutic agent for WMS. Collectively, this study identifies lysosomal cholesterol ester hydrolysis as a novel therapeutic target for the treatment of irreversible white matter injury.</p>