Late-onset retinal macular degeneration (L-ORMD) is an autosomal dominant condition resembling age-related macular degeneration (AMD) in which a key pathological feature is a thick extracellular sub-retinal pigment epithelial (RPE) deposit. L-ORMD is caused by mutation in the C1QTNF5 (CTRP5) short-chain collagen gene, but the disease mechanism is unknown. Here, we first show that wild-type C1QTNF5 is secreted, whereas mutant C1QTNF5 is misfolded and retained within the endoplasmic reticulum (ER). Secondly, the ER retained mutant protein has a shorter half-life than wild-type C1QTNF5 and is preferentially degraded by proteasomes. Thirdly, C1QTNF5 is shown to interact with the membrane-type frizzled related protein (MFRP), on the basis of yeast two-hybrid, protein pull-down and co-immunoprecipitation assays and RPE co-localization. These data suggest that L-ORMD is due to insufficient levels of secreted C1QTNF5, compromised RPE cell function resulting from ER retention of the mutant protein or both mechanisms.