Dietary fat impacts cholesterol levels by influencing the types of fats consumed. Saturated and trans fats can increase levels of LDL (low-density lipoprotein) cholesterol, known as "bad" cholesterol, which raises the risk of heart disease. Conversely, unsaturated fats, found in foods like avocados and nuts, can improve cholesterol profiles and promote cardiovascular health. The key is to replace unhealthy fats with healthier options rather than simply reducing fat intake. A balanced diet that includes healthy fats is essential for managing cholesterol and maintaining overall health.