GRN mutations cause frontotemporal dementia (GRN-FTD) due to deficiency in progranulin (PGRN), a lysosomal and secreted protein with unclear function. Here, we found that Grn–/– mice exhibit a global deficiency in bis(monoacylglycero)phosphate (BMP), an endolysosomal phospholipid we identified as a pH-dependent PGRN interactor as well as a redox-sensitive enhancer of lysosomal proteolysis and lipolysis. Grn–/– brains also showed an age-dependent, secondary storage of glucocerebrosidase substrate glucosylsphingosine. We investigated a protein replacement strategy by engineering protein transport vehicle (PTV):PGRN—a recombinant protein linking PGRN to a modified Fc domain that binds human transferrin receptor for enhanced CNS biodistribution. PTV:PGRN rescued various Grn–/– phenotypes in primary murine macrophages and human iPSC-derived microglia, including oxidative stress, lysosomal dysfunction, and endomembrane damage. Peripherally delivered PTV:PGRN corrected levels of BMP, glucosylsphingosine, and disease pathology in Grn–/– CNS, including microgliosis, lipofuscinosis, and neuronal damage. PTV:PGRN thus represents a potential biotherapeutic for GRN-FTD. Display omitted •Grn–/– mice exhibit robust BMP lipid deficiency with concurrent GlcSph accumulation•BMP stimulates glucocerebrosidase activity and lysosome function in Grn–/– models•PGRN was fused to a human transferrin receptor binding Fc to increase CNS exposure•PTV:PGRN biologic rescues Grn–/– CNS lysosomal, microglial, and neuronal dysfunction Peripherally delivered progranulin biologic with enhanced CNS biodistribution corrects CNS disease pathology of the GRN mouse model of frontotemporal dementia.