Cholesterol is a lipid. It is basically a sterol and is synthesized in the body as well as ingested as food. Steroid hormones are derived from cholesterol so are various steroids in the body. Dietary cholesterol is a waxy, fat-like substance found in foods that come from animals. While cholesterol is needed for normal body function, your liver makes enough for your body's needs so that you don't need to eat any cholesterol at all. This is the reason when excess cholesterol rich foods are eaten the blood cholesterol level rises and causes problems.