Oxysterols (oxidized derivatives of cholesterol and phytosterols) can be generated in the human organism through different oxidation processes, some requiring enzymes. Furthermore, oxysterols are also present in food due to lipid oxidation reactions caused by heating treatments, contact with oxygen, exposure to sunlight, etc., and they could be absorbed from the diet, at different rates depending on their side chain length. In the organism, oxysterols can follow different routes: secreted into the intestinal lumen, esterified and distributed by lipoproteins to different tissues or degraded, mainly in the liver. Cholesterol oxidation products (COPs) have shown cytotoxicity, apoptotic and pro-inflammatory effects and they have also been linked with chronic diseases including atherosclerotic and neurodegenerative processess. In the case of phytosterol oxidation products (POPs), more research is needed on toxic effects. Nevertheless, current knowledge suggests they may also cause cytotoxic and pro-apoptotic effects, although at higher concentrations than COPs. Recently, new beneficial biological activities of oxysterols are being investigated. Whereas COPs are associated with cholesterol homeostasis mediated by different mechanisms, the implication of POPs is not clear yet. Available literature on sources of oxysterols in the organism, metabolism, toxicity and potential beneficial effects of these compounds are reviewed in this paper.