Infantile Neuronal Ceroid Lipofuscinosis (INCL), commonly known as infantile Batten disease, is a devastating neurodegenerative lysosomal storage disease caused by inactivating mutations in the CLN1 gene. CLN1 encodes palmitoyl‐protein thioesterases‐1 (PPT1), a lysosomal depalmitoylating enzyme essential for degradation of S‐palmitoylated proteins (constituents of ceroid) by lysosomal hydrolases. Despite this discovery more than two decades ago, the precise molecular mechanism of INCL pathogenesis has remained elusive. Here we report that in the brain of Cln1−/− mice, a reliable animal model of INCL, lysosomal Ca++ levels were significantly lower compared with those of their WT littermates. Moreover, in Cln1−/− mice the levels of inositol 1, 4, 5‐triphosphate receptor type‐1 (IP3R1), which facilitates the transport of Ca++ from the ER to the lysosome, were also substantially lower. We found that NFATC4, the transcription factor that regulates Ip3R1‐expression, requires S‐palmitoylation for its translocation from the cytosol to the nucleus. Notably, we identified ZDHHC2 and ZDHHC4 are the palmitoyl acyl transferases that S‐palmitoylate NFATC4. Moreover, the lower levels of these ZDHHCs, S‐palmitoylation of NFATC4 in Cln1−/− mice was significantly decreased suppressing its translocation from the cytosol to the nucleus. Consequently, low IP3R1 expression in Cln1−/− mouse brain significantly reduced lysosomal Ca++ levels. Notably, the enzymatic activities of Ca++‐dependent lysosomal proteases such as cathepsin D (CD) and tripeptidyl peptidase‐1 (TPP1) were markedly inhibited causing lysosomal accumulation of undegraded substrates. Interestingly, mutations in TPP1 (CLN2) and CD (CLN10), cause late infantile NCL (LINCL) and congenital NCL (CNCL), respectively. Our results reveal a previously unrecognized role of Cln1/Ppt1 in regulating lysosomal Ca++ homeostasis and suggest that dysregulation of lysosomal Ca++ homeostasis may compromise its degradative function and contribute to INCL pathogenesis. Studies to determine whether a brain‐penetrant, PPT1‐mimetic, small molecule, NtBuHA, ameliorates this defect are ongoing.Support or Funding InformationNIH intramural Fund