Inhalation of crystalline silica has been well documented to cause pulmonary inflammation and lung disease such as silicosis. Respirable silica particles deposit in the lungs and are phagocytosed by alveolar macrophages. Subsequently, phagocytosed silica remains undegraded within lysosomes causing lysosomal damage known as phagolysosomal membrane permeability (LMP). LMP can trigger the assembly of the NLRP3 inflammasome resulting in release of inflammatory cytokines that contribute to disease. In order to better understand the mechanisms of LMP this study used murine bone marrow derived macrophages (BMdM) as a cellular model to investigate the mechanism of silica-induced LMP. Reduction of lysosomal cholesterol in bone marrow derived macrophages with 18:1 phosphatidylglycerol (DOPG) liposome treatment increased silica-induced LMP and IL-1β release. Conversely, increasing lysosomal and cellular cholesterol with U18666A reduced IL-1β release. Co-treatment of bone marrow derived macrophages with 18:1 phosphatidylglycerol and U18666A resulted in a significant reduction of the effects of U18666A on lysosomal cholesterol. Phosphatidylcholine 100-nm liposome model systems were used to examine the effects of silica particles on lipid membrane order. Time-resolved fluorescence anisotropy of the membrane probe, Di-4-ANEPPDHQ, was used to determine changes to membrane order. Silica increased lipid order that was attenuated by inclusion of cholesterol in the phosphatidylcholine liposomes. These results demonstrate that increased cholesterol can attenuate silica-induced membrane changes in liposomes and cell models, while decreasing cholesterol exacerbates silica-induced membrane changes. Selective manipulation of lysosomal cholesterol may be a way of attenuating lysosomal disruption and preventing silica-induced chronic inflammatory disease progression.