Atomic-level structural insight on the human ABCG2 membrane protein, a pharmacologically important transporter, has been recently revealed by several key papers. In spite of the wealth of structural data, the pathway of transmembrane movement for the large variety of structurally different ABCG2 substrates and the physiological lipid regulation of the transporter has not been elucidated. The complex molecular dynamics simulations presented here may provide a breakthrough in understanding the steps of the substrate transport process and its regulation by cholesterol. Our analysis revealed drug binding cavities other than the central binding site and delineated a putative dynamic transport pathway for substrates with variable structures. We found that membrane cholesterol accelerated drug transport by promoting the closure of cytoplasmic protein regions. Since ABCG2 is present in all major biological barriers and drug-metabolizing organs, influences the pharmacokinetics of numerous clinically applied drugs, and plays a key role in uric acid extrusion, this information may significantly promote a reliable prediction of clinically important substrate characteristics and drug-drug interactions. Electronic supplementary material The online version of this article (10.1007/s00018-020-03651-3) contains supplementary material, which is available to authorized users.