Prominin-1 (Prom1) is a pentaspan membrane protein that associates with curved regions of the plasma membrane. Prom1 localizes to cholesterol-rich domains and requires membrane cholesterol to support membrane remodeling. Membrane bending activity is particularly evident in photoreceptors, where Prom1 mutations cause loss of outer segment disk homeostasis leading to cone-rod retinal dystrophy (CCRD). However, the mechanistic link between prominin-dependent cholesterol binding, membrane remodeling, and retinal disease remains unclear. Here, we characterize the membrane bending function and specific cholesterol binding activity of Prom1 and its proposed homolog Tweety homology 1 (Ttyh1) in extracellular vesicles (EVs). Prom1 and Ttyh1 induce formation of EVs in cultured mammalian cells that are biophysically similar. Though both proteins bend membranes and form EVs at the plasma membrane, Ttyh1 lacks a stable interaction with cholesterol that is present in Prom1. Correspondingly, Ttyh1 forms EVs that are more deformed than those produced by Prom1. An evolutionarily conserved and retinal disease-associated Prom1 residue (Trp-795) is necessary for cholesterol binding, EV membrane deformation, and efficient trafficking to the plasma membrane. Removal of N-glycan moieties from Prom1 biases the enzyme toward a cholesterol-bound state. We propose that Prom1 and Ttyh1 are both members of a single prominin family of membrane bending proteins, that Ttyh1 is a constitutively active member of this family, and that Prom1 is regulated by cholesterol binding and N-glycosylation. These findings shed light on mechanisms of prominin family function in disease and help unify models of prominin function across diverse cell types.