Mutations in PLA2G6 (PARK14) cause neurodegenerative disorders in humans, including autosomal recessive neuroaxonal dystrophy and early-onset parkinsonism. We show that loss of iPLA2-VIA, the fly homolog of PLA2G6, reduces lifespan, impairs synaptic transmission, and causes neurodegeneration. Phospholipases typically hydrolyze glycerol phospholipids, but loss of iPLA2-VIA does not affect the phospholipid composition of brain tissue but rather causes an elevation in ceramides. Reducing ceramides with drugs, including myriocin or desipramine, alleviates lysosomal stress and suppresses neurodegeneration. iPLA2-VIA binds the retromer subunits Vps35 and Vps26 and enhances retromer function to promote protein and lipid recycling. Loss of iPLA2-VIA impairs retromer function, leading to a progressive increase in ceramide. This induces a positive feedback loop that affects membrane fluidity and impairs retromer function and neuronal function. Similar defects are observed upon loss of vps26 or vps35 or overexpression of α-synuclein, indicating that these defects may be common in Parkinson disease.