Background: The limited bioavailability of free phytosterols restricts their clinical application in managing hypercholesterolemia. This study aimed to develop phytosterol nanoparticles (PNs) to enhance bioactivity and investigate their cholesterol-lowering efficacy and underlying mechanisms in vivo. Methods: Phytosterol nanoparticles (PNs) (93.35 nm) were engineered using soy protein isolate and administered orally at concentrations of 4.00–12.50 mg/mL to high-fat-diet-induced hypercholesterolemic mice (n = 60) over a 4-week period. Serum and hepatic lipid profiles, histopathology, gene/protein expression related to cholesterol metabolism, and fecal sterol content were evaluated. Results: PNs dose-dependently reduced serum total cholesterol (TC: 28.6–36.8%), triglycerides (TG: 22.4–30.1%), and LDL-C (31.2–39.5%), while increasing HDL-C by 18.7–23.4% compared to hyperlipidemic controls (p < 0.01). Hepatic TC and TG accumulation decreased by 34.2% and 41.7%, respectively, at the highest dose, with histopathology confirming attenuated fatty degeneration. Mechanistically, PNs simultaneously suppressed cholesterol synthesis through downregulating HMGCR (3.2-fold) and SREBP2 (2.8-fold), while enhancing cholesterol catabolism via CYP7A1 upregulation (2.1-fold) at protein level. Although less potent than simvastatin (p < 0.05), the nanoparticles exhibited unique dual-pathway modulation absent in conventional phytosterol formulations. Fecal analysis revealed dose-responsive cholesterol excretion (36.01 vs. 11.79 mg/g in controls), indicating enhanced enteric elimination. While slightly less potent than simvastatin (p < 0.05), PNs offered unique dual-pathway modulation absent in conventional phytosterol formulations. Conclusions: Nano-encapsulation significantly improves the bioavailability and hypocholesterolemic efficacy of phytosterols. PNs represent a promising nutraceutical strategy for cholesterol management by concurrently regulating cholesterol synthesis and catabolism, with potential application in both preventive and therapeutic contexts.