FIG4 is a ubiquitously expressed phosphatase that, in complex with FAB1/PIKFYVE and VAC14, regulates the biosynthesis of the signaling lipid PI(3,5)P(2). Null mutation of Fig4 in the mouse results in spongiform degeneration of brain and peripheral ganglia, defective myelination and juvenile lethality. Partial loss-of-function of human FIG4 results in a severe form of Charcot-Marie-Tooth neuropathy. Neurons from null mice contain enlarged vacuoles derived from the endosome/lysosome pathway, and astrocytes accumulate proteins involved in autophagy. Other cellular defects include astrogliosis and microgliosis. To distinguish the contributions of neurons and glia to spongiform degeneration in the Fig4 null mouse, we expressed Fig4 under the control of the neuron-specific enolase promoter and the astrocyte-specific glial fibrillary acidic protein promoter in transgenic mice. Neuronal expression of Fig4 was sufficient to rescue cellular and neurological phenotypes including spongiform degeneration, gliosis and juvenile lethality. In contrast, expression of Fig4 in astrocytes prevented accumulation of autophagy markers and microgliosis but did not prevent spongiform degeneration or lethality. To confirm the neuronal origin of spongiform degeneration, we generated a floxed allele of Fig4 and crossed it with mice expressing the Cre recombinase from the neuron-specific synapsin promoter. Mice with conditional inactivation of Fig4 in neurons developed spongiform degeneration and the full spectrum of neurological abnormalities. The data demonstrate that expression of Fig4 in neurons is necessary and sufficient to prevent spongiform degeneration. Therapy for patients with FIG4 deficiency will therefore require correction of the deficiency in neurons.