The endoplasmic reticulum (ER) is shaped by abundant membrane curvature-generating proteins that include the REEP family member REEP5. The REEP1 subfamily, consisting of four proteins in mammals (REEP1-4), is less abundant and lack a N-terminal region. Mutations in REEP1 and REEP2 cause Hereditary Spastic Paraplegia, but the function of these four REEP proteins remains enigmatic. Here we show that REEP1-4 reside in a unique vesicular compartment and identify features that determine their localization. Mutations in REEP1-4 that compromise curvature generation, including those causing disease, relocalize the proteins to the bulk ER. These mutants interact with wild-type proteins to retain them in the ER, consistent with their autosomal-dominant disease inheritance. REEP1 vesicles contain the membrane fusogen atlastin-1, but not general ER proteins. We propose that REEP1-4 generate these vesicles themselves by budding from the ER, and that they cycle back to the ER by atlastin-mediated fusion. The vesicles may serve to regulate ER tubule dynamics.