Catalyzes the production of 7-dehydrocholesterol (7-DHC or cholesta-5,7-dien-3beta-ol) by inserting a double bond (desaturating) at the C7-C8 single bond of cholesterol. This reaction is the first step in the synthesis of the steroid hormone Delta(7)-dafachronic acid. cholesterol + H(+) + NADPH + O2 = 7-dehydrocholesterol + 2 H2O + NADP(+) cholesterol + H(+) + NADH + O2 = 7-dehydrocholesterol + 2 H2O + NAD(+) Binds 1 [2Fe-2S] cluster per subunit. Steroid hormone biosynthesis; dafachronic acid biosynthesis. Belongs to the cholesterol 7-desaturase family.