Niemann-Pick type C1 (NPC1) protein is essential for the transport of externally derived cholesterol from lysosomes to other organelles. Deficiency of NPC1 underlies the progressive NPC1 neurodegenerative disorder. Currently, there are no curative therapies for this fatal disease. Given the Ca2+ hypothesis of neurodegeneration, which posits that altered Ca2+ dynamics contribute to neuropathology, we tested if disease mutations in NPC1 alter Ca2+ signaling and neuronal plasticity. We determine that NPC1 inhibition or disease mutations potentiate store-operated Ca2+ entry (SOCE) due to a presenilin 1 (PSEN1)–dependent reduction in ER Ca2+ levels alongside elevated expression of the molecular SOCE components ORAI1 and STIM1. Associated with this dysfunctional Ca2+ signaling is destabilization of neuronal dendritic spines. Knockdown of PSEN1 or inhibition of the SREBP pathway restores Ca2+ homeostasis, corrects differential protein expression, reduces cholesterol accumulation, and rescues spine density. These findings highlight lysosomes as a crucial signaling platform responsible for tuning ER Ca2+ signaling, SOCE, and synaptic architecture in health and disease.