Obesity is a major risk factor for cancers including hepatocellular carcinoma (HCC) that develops from a background of non-alcoholic fatty liver disease (NAFLD). Hypercholesterolemia is a common comorbidity of obesity. Although cholesterol biosynthesis mainly occurs in the liver, its role in HCC development of obese people remains obscure. Using high-fat high-carbohydrate diet-associated orthotopic and spontaneous NAFLD-HCC mouse models, we found that hepatic cholesterol accumulation in obesity selectively suppressed natural killer T (NKT) cell-mediated antitumor immunosurveillance. Transcriptome analysis of human liver revealed aberrant cholesterol metabolism and NKT cell dysfunction in NAFLD patients. Notably, cholesterol-lowering rosuvastatin restored NKT expansion and cytotoxicity to prevent obesogenic diet-promoted HCC development. Moreover, suppression of hepatic cholesterol biosynthesis by a mammalian target of rapamycin (mTOR) inhibitor vistusertib preceded tumor regression, which was abolished by NKT inactivation but not CD8 T cell depletion. Mechanistically, sterol regulatory element-binding protein 2 (SREBP2)-driven excessive cholesterol production from hepatocytes induced lipid peroxide accumulation and deficient cytotoxicity in NKT cells, which were supported by findings in people with obesity, NAFLD and NAFLD-HCC. This study highlights mTORC1/SREBP2/cholesterol-mediated NKT dysfunction in the tumor-promoting NAFLD liver microenvironment, providing intervention strategies that invigorating NKT cells to control HCC in the obesity epidemic.