An intronic GGGGCC repeat expansion in C9ORF72 is the most common cause of amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD), but the pathogenic mechanism of this repeat remains unclear. Using human induced motor neurons (iMNs), we found that repeat-expanded C9ORF72 was haploinsufficient in ALS. We found that C9ORF72 interacted with endosomes and was required for normal vesicle trafficking and lysosomal biogenesis in motor neurons. Repeat expansion reduced C9ORF72 expression, triggering neurodegeneration through two mechanisms: accumulation of glutamate receptors, leading to excitotoxicity, and impaired clearance of neurotoxic dipeptide repeat proteins derived from the repeat expansion. Thus, cooperativity between gain- and loss-of-function mechanisms led to neurodegeneration. Restoring C9ORF72 levels or augmenting its function with constitutively active RAB5 or chemical modulators of RAB5 effectors rescued patient neuron survival and ameliorated neurodegenerative processes in both gain- and loss-of-function C9ORF72 mouse models. Thus, modulating vesicle trafficking was able to rescue neurodegeneration caused by the C9ORF72 repeat expansion. Coupled with rare mutations in ALS2, FIG4, CHMP2B, OPTN and SQSTM1, our results reveal mechanistic convergence on vesicle trafficking in ALS and FTD.