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.