Lysosomes are essential for maintaining neuronal homeostasis through degradation of damaged organelles and misfolded and accumulated proteins. Increasing evidence implicates lysosomal dysfunction in several neurodegenerative disorders, including Parkinson, Alzheimer and Huntington disease. In addition, more than two-thirds of lysosomal storage diseases are exhibiting dysfunction in the central nervous system, emphasizing how neurons are particularly vulnerable to lysosomal impairment. In order to more directly examine the lysosomal function in neurodegeneration it is particularly informative to study neurodegenerative diseases that are caused by mutations in lysosomal proteins. One such disease is Kufor-Rakeb syndrome that is caused by loss-of-function mutations in the lysosomal protein ATP13A2/PARK9 and characterized by early-onset parkinsonism with pyramidal degeneration and dementia. While previous data implicate ATP13A2 in α-synuclein misfolding and toxicity (a protein involved in pathogenesis of Parkinson disease and related synucleinopathies), the underlying mechanism and biological function of ATP13A2 have not been established. We found that loss of ATP13A2 function leads to accumulation of enlarged lysosomes, impaired lysosomal turnover of autophagic vesicles and impaired lysosomal degradation capacity. This lysosomal dysfunction results in preferential accumulation of α-synuclein and toxicity in neurons. Importantly, depletion of endogenous α-synuclein attenuated the toxicity in ATP13A2-deficient neurons, suggesting that loss of ATP13A2 mediates neurotoxicity at least partially via lysosomal dysfunction and consequent accumulation of α-synuclein. In addition, silencing of ATP13A2 in the Caenorhabditis elegans model of Parkinson disease has enhanced α-synuclein mediated degeneration of dopaminergic neurons, further underscoring the functional link between ATP13A2 and α-synuclein in neurodegeneration. Furthermore, in order to elucidate a normal biological function of ATP13A2 protein we identified its interacting partners that revealed putative role for ATP13A2 in vesicular trafficking and fusion. Importantly, a subset of these interactors was modifiers of α-synuclein aggregation and neurotoxicity in Caenorhabditis elegans, further supporting a functional link between ATP13A2 and α-synuclein. Our findings implicate lysosomal dysfunction and α-synuclein accumulation in the pathogenesis of Kufor-Rakeb syndrome and suggest that upregulation of lysosomal function and downregulation of α-synuclein represent promising therapeutic strategies for this disorder.