Project Summary Frontotemporal degeneration (FTD) and Alzheimer’s disease (AD) are two of the most common causes of dementia, share overlapping pathologies, are huge health burdens, and are incurable. This proposal focuses on elucidating how loss of progranulin (PGRN), and its mature products the granulins, drive neurodegeneration and lysosomal dysfunction associated with FTD and AD. PGRN is a secreted protein composed of 7.5 tandem domains that are cleaved into 6kDa granulin proteins (GRNs), through a poorly defined pathway. Genetic variants and loss-of-function mutations in the progranulin gene (Grn), reduce the production of the progranulin (PGRN) protein and increase the risk of AD and cause FTD, respectively. Converging evidence suggest that decreased levels of PGRN/granulins induce lysosomal dysfunction leading to neuroinflammation and degeneration through an unknown mechanism. Based on our published work and new data, we propose that granulins are the functional unit of PGRN and are produced in the endo-lysosomal pathway. We find PGRN is trafficked to the lysosome and processed into stable granulins in multiple tissues and cells. Clinically, PGRN and granulins are equally decreased in iPSC-derived neurons and brain tissue from FTD-GRN carriers. Further, expression of the FTD-risk-factor TMEM106B reduces granulins. Finally, extracellular granulin can rescue lysosomal defects in Grn KO mouse fibroblasts, providing strong evidence that granulins facilitate lysosome function. Our findings fit into the larger narrative that lysosome-autophagy dysfunction is a critical pathogenic mechanism in FTD and AD. Our preliminary data lead us to propose the hypothesis that PGRN is trafficked to the lysosome and processed into mature, functional granulins that mediate lysosomal homeostasis and neuroprotection. Successful completion of the following specific aims will advance the neurodegeneration field by providing mechanism-based rationale for testing granulins as a novel therapy for FTD and AD. We will 1) delineate the molecular pathways that traffic PGRN to the lysosome, 2) determine the molecular mechanisms of granulin production and function in the lysosome, and 3) determine the in vivo role of PGRN and granulins in lysosome dysfunction and neurodegeneration. Completion of the proposed studies will enable us to critically evaluate the paradigm-shifting hypothesis that granulins are lysosomal, functional, and neuroprotective. In doing so, we will uncover why decreased levels of PGRN lead to FTD, AD, or NCL and a new approach to treat diseases caused by decreased PGRN.