Glycosphingolipids are endocytosed and targeted to the Golgi apparatus but are mistargeted to lysosomes in sphingolipid storage disorders. Substrate reduction therapy utilizes imino sugars to inhibit glucosylceramide synthase and potentially abrogate the effects of storage. Niemann-Pick type C (NPC) disease is a disorder of intracellular transport where glycosphingolipids (GSLs) and cholesterol accumulate in endosomal compartments. The mechanisms of altered intracellular trafficking are not known but may involve the mistargeting and disrupted function of proteins associated with GSL membrane microdomains. Membrane microdomains were isolated by Triton X-100 and sucrose density gradient ultracentrifugation. High pressure liquid chromatography and mass spectrometric analysis of NPC1(-/-) mouse brain revealed large increases in GSL. Sphingosine was also found to be a component of membrane microdomains, and in NPC liver and spleen, large increases in cholesterol and sphingosine were found. GSL and cholesterol levels were increased in mutant NPC1-null Chinese hamster ovary cells as well as U18666A and progesterone induced NPC cell culture models. However, inhibition of GSL synthesis in NPC cells with N-butyldeoxygalactonojirimycin led to marked decreases in GSL but only small decreases in cholesterol levels. Both annexin 2 and 6, membrane-associated proteins that are important in endocytic trafficking, show distorted distributions in NPC cells. Altered BODIPY lactosylceramide targeting, decreased endocytic uptake of a fluid phase marker, and mistargeting of annexin 2 (phenotypes associated with NPC) are reversed by inhibition of GSL synthesis. It is suggested that accumulating GSL is part of a mislocalized membrane microdomain and is responsible for the deficit in endocytic trafficking found in NPC disease.