Lysosomes are central organelles for cellular degradation and energy metabolism. Neuronal ceroid lipofuscinoses (NCLs) are a group of the most common neurodegenerative lysosomal storage disorders characterized by intracellular accumulation of ceroid in neurons. Mutations in KCTD7, a gene encoding an adaptor of the CUL3-RING E3 ubiquitin ligase (CRL3) complex, are categorized as a unique NCL subtype. However, the underlying mechanisms remain elusive. Here, we report various lysosomal and autophagic defects in KCTD7-deficient cells. Mechanistically, the CRL3-KCTD7 complex degrades CLN5, whereas patient-derived KCTD7 mutations disrupt the interaction between KCTD7-CUL3 or KCTD7-CLN5 and ultimately lead to excessive accumulation of CLN5. The accumulated CLN5 disrupts the interaction between CLN6/8 and lysosomal enzymes at the endoplasmic reticulum (ER), subsequently impairing ER-to-Golgi trafficking of lysosomal enzymes. Our findings reveal previously unrecognized roles of KCTD7-mediated CLN5 proteolysis in lysosomal homeostasis and demonstrate that KCTD7 and CLN5 are biochemically linked and function in a common neurodegenerative pathway.