Thyroid hormones are released from thyroglobulin (Tg) in lysosomes, which are impaired in infantile/nephropathic cystinosis. Cystinosis is a lysosomal cystine storage disease due to defective cystine exporter, cystinosin. Cystinotic children develop subclinical and then overt hypothyroidism. Why hypothyroidism is the most frequent and earliest endocrine complication of cystinosis is unknown. We here defined early alterations in Ctns(-/-) mice thyroid and identified subcellular and molecular mechanisms. At 9 months, T4 and T3 plasma levels were normal and TSH was moderately increased (∼4-fold). By histology, hyperplasia and hypertrophy of most follicles preceded colloid exhaustion. Increased immunolabeling for thyrocyte proliferation and apoptotic shedding indicated accelerated cell turnover. Electron microscopy revealed endoplasmic reticulum (ER) dilation, apical lamellipodia indicating macropinocytic colloid uptake, and lysosomal cystine crystals. Tg accumulation in dilated ER contrasted with mRNA down-regulation. Increased expression of ER chaperones, glucose-regulated protein of 78 kDa and protein disulfide isomerase, associated with alternative X-box binding protein-1 splicing, revealed unfolded protein response (UPR) activation by ER stress. Decreased Tg mRNA and ER stress suggested reduced Tg synthesis. Coordinated increase of UPR markers, activating transcription factor-4 and C/EBP homologous protein, linked ER stress to apoptosis. Hormonogenic cathepsins were not altered, but lysosome-associated membrane protein-1 immunolabeling disclosed enlarged vesicles containing iodo-Tg and impaired lysosomal fusion. Isopycnic fractionation showed iodo-Tg accumulation in denser lysosomes, suggesting defective lysosomal processing and hormone release. In conclusion, Ctns(-/-) mice showed the following alterations: 1) compensated primary hypothyroidism and accelerated thyrocyte turnover; 2) impaired Tg production linked to ER stress/UPR response; and 3) altered endolysosomal trafficking and iodo-Tg processing. The Ctns(-/-) thyroid is useful to study disease progression and evaluate novel therapies.