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Contacts between endosomes and the endoplasmic reticulum (ER) promote endosomal tubule fission, but the mechanisms involved and consequences of tubule fission failure are incompletely understood. We found that interaction between the microtubule-severing enzyme spastin and the ESCRT protein IST1 at ER-endosome contacts drives endosomal tubule fission. Failure of fission caused defective sorting of mannose 6-phosphate receptor, with consequently disrupted lysosomal enzyme trafficking and abnormal lysosomal morphology, including in mouse primary neurons and human stem cell-derived neurons. Consistent with a role for ER-mediated endosomal tubule fission in lysosome function, similar lysosomal abnormalities were seen in cellular models lacking the WASH complex component strumpellin or the ER morphogen REEP1. Mutations in spastin, strumpellin, or REEP1 cause hereditary spastic paraplegia (HSP), a disease characterized by axonal degeneration. Our results implicate failure of the ER-endosome contact process in axonopathy and suggest that coupling of ER-mediated endosomal tubule fission to lysosome function links different classes of HSP proteins, previously considered functionally distinct, into a unifying pathway for axonal degeneration.