TMEM127 is an endosome-associated tumor suppressor gene in pheochromocytomas, neuroendocrine tumors that can co-occur with renal cell carcinomas (RCCs). TMEM127 loss leads to increased mTOR signaling. However, the spectrum of tumors with TMEM127 mutation and how TMEM127 and mTOR interact in tumorigenesis remains unknown. Here, we report that germline TMEM127 mutations occur in RCCs and that some mutant proteins, unlike wild-type (WT) TMEM127, fail to cooperate with activated early endosomal GTPase, Rab5, to inhibit mTOR signaling. Tmem127-null mouse embryonic fibroblasts (MEFs) are deficient in generating early-to-late hybrid endosomes upon constitutive Rab5 activation, a defect rescued by WT, but not mutant, TMEM127. This endosomal dysfunction results in diminished mTOR colocalization with Rab5-positive vesicles. Conversely, active, lysosomal-bound mTOR is increased in Tmem127-null MEFs, which also display enhanced lysosomal biogenesis. Our data map the tumor-suppressive properties of TMEM127 to modulation of mTOR function in the endolysosome, a feature that may contribute to both pheochromocytoma and RCC pathogenesis.