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 (PubMed:21632547). Essential regulator of steroid biosynthesis, as this reaction is the first step in the synthesis of the steroid hormone Delta(7)-dafachronic acid (PubMed:21632547, PubMed:16763204). Required for insect molting, metamorphosis and body growth throughout development via the regulation of ecdysteroid biosynthesis in the prothoracic gland (PubMed:16763204). 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. Expressed predominantly in the prothoracic gland and weakly in brain and malpighian tubules. RNAi animals show apparent growth arrest in body size compared with control animal, also loss of nvd-Dm function prevents larval growth prior to the initiation of the molting process. Nvd_Dm plays a pivotal role in larval development in Drosophila. On this basis of the prolonged first instar larval phenotype, the gene was named 'neverland', which is the fictional island featured in J. M. Barrie's play Peter Pan, where children cease to age. Belongs to the cholesterol 7-desaturase family.