GRN mutations cause frontotemporal dementia (GRN-FTD) due to deficiency in progranulin (PGRN), a lysosomal and secreted protein with unclear function. Here, we found that Grn–/– mice exhibit a global deficiency in bis(monoacylglycero)phosphate (BMP), an endolysosomal phospholipid we identified as a pH-dependent PGRN interactor as well as a redox-sensitive enhancer of lysosomal proteolysis and lipolysis. Grn–/– brains also showed an age-dependent, secondary storage of glucocerebrosidase substrate glucosylsphingosine. We investigated a protein replacement strategy by engineering protein transport vehicle (PTV):PGRN—a recombinant protein linking PGRN to a modified Fc domain that binds human transferrin receptor for enhanced CNS biodistribution. PTV:PGRN rescued various Grn–/– phenotypes in primary murine macrophages and human iPSC-derived microglia, including oxidative stress, lysosomal dysfunction, and endomembrane damage. Peripherally delivered PTV:PGRN corrected levels of BMP, glucosylsphingosine, and disease pathology in Grn–/– CNS, including microgliosis, lipofuscinosis, and neuronal damage. PTV:PGRN thus represents a potential biotherapeutic for GRN-FTD.