Ca²⁺ is the most ubiquitous second messenger in neurons whose spatial and temporal elevations are tightly controlled to initiate and orchestrate diverse intracellular signaling cascades. Numerous neuropathologies result from mutations or alterations in Ca²⁺ handling proteins; thus, elucidating molecular pathways that shape Ca²⁺ signaling is imperative. Here, we report that loss-of-function, knockout, or neurodegenerative disease–causing mutations in the lysosomal cholesterol transporter, Niemann-Pick Type C1 (NPC1), initiate a damaging signaling cascade that alters the expression and nanoscale distribution of IP₃R type 1 (IP₃R1) in endoplasmic reticulum membranes. These alterations detrimentally increase G_q-protein coupled receptor–stimulated Ca²⁺ release and spontaneous IP₃R1 Ca²⁺ activity, leading to mitochondrial Ca²⁺ cytotoxicity. Mechanistically, we find that SREBP-dependent increases in Presenilin 1 (PS1) underlie functional and expressional changes in IP₃R1. Accordingly, expression of PS1 mutants recapitulate, while PS1 knockout abrogates Ca²⁺ phenotypes. These data present a signaling axis that links the NPC1 lysosomal cholesterol transporter to the damaging redistribution and activity of IP₃R1 that precipitates cell death in NPC1 disease and suggests that NPC1 is a nanostructural disease.