Loss‐of‐function mutations in progranulin (GRN) are associated with frontotemporal lobar degeneration with intraneuronal ubiquitinated protein accumulations composed primarily of hyperphosphorylated TDP‐43 (FTLD‐TDP). The mechanism by which GRN deficiency causes TDP‐43 pathology or neurodegeneration remains elusive. To explore the role of GRN in vivo, we established Grn knockout mice using a targeted genomic recombination approach and Cre‐LoxP technology. Constitutive Grn homozygous knockout (Grn^−/−) mice were born in an expected Mendelian pattern of inheritance and showed no phenotypic alterations compared to heterozygous (Grn^+/−) or wild‐type (Wt) littermates until 10 months of age. From then, Grn^−/− mice showed reduced survival accompanied by significantly increased gliosis and ubiquitin‐positive accumulations in the cortex, hippocampus, and subcortical regions. Although phosphorylated TDP‐43 could not be detected in the ubiquitinated inclusions, elevated levels of hyperphosphorylated full‐length TDP‐43 were recovered from detergent‐insoluble brain fractions of Grn^−/− mice. Phosphorylated TDP‐43 increased with age and was primarily extracted from the nuclear fraction. Grn^−/− mice also showed degenerative liver changes and cathepsin D‐positive foamy histiocytes within sinusoids, suggesting widespread defects in lysosomal turnover. An increase in insulin‐like growth factor (IGF)‐1 was observed in Grn^−/− brains, and increased IGF‐1 signalling has been associated with decreased longevity. Our data suggest that progranulin deficiency in mice leads to reduced survival in adulthood and increased cellular ageing accompanied by hyperphosphorylation of TDP‐43, and recapitulates key aspects of FTLD‐TDP neuropathology. Copyright © 2012 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.