CLN7 disease is an autosomal recessive, childhood-onset neurodegenerative lysosomal storage disorder caused by the defective lysosomal membrane protein CLN7. We have disrupted the Cln7/Mfsd8 gene in mice by targeted deletion of exon 2 generating a novel knockout (KO) mouse model for CLN7 disease, which recapitulates key features of human CLN7 disease pathology. Cln7 KO mice showed increased mortality and a neurological phenotype including hind limb clasping and myoclonus. Lysosomal dysfunction in the brain of mutant mice was shown by the storage of autofluorescent lipofuscin-like lipopigments, subunit c of mitochondrial ATP synthase and saposin D and increased expression of lysosomal cathepsins B, D and Z. By immunohistochemical co-stainings, increased cathepsin Z expression restricted to Cln7-deficient microglia and neurons was found. Ultrastructural analyses revealed large storage bodies in Purkinje cells of Cln7 KO mice containing inclusions composed of irregular, curvilinear and rectilinear profiles as well as fingerprint profiles. Generalized astrogliosis and microgliosis in the brain preceded neurodegeneration in the olfactory bulb, cerebral cortex and cerebellum in Cln7 KO mice. Increased levels of LC3-II and the presence of neuronal p62- and ubiquitin-positive protein aggregates suggested that impaired autophagy represents a major pathomechanism in the brain of Cln7 KO mice. The data suggest that loss of the putative lysosomal transporter Cln7 in the brain leads to lysosomal dysfunction, impaired constitutive autophagy and neurodegeneration late in disease.