During endosomal trafficking, the ubiquitin-status of membrane-bound protein cargo determines whether it is recycling to the surface or trafficked through intermediate multivesicular bodies (MVBs) for lysosomal degradation. Neurons, particularly their synapses, are extremely sensitive to perturbations in endolysosomal transport. We describe a lethal severe neurodevelopmental disorder (characterised by limb hypertonia, central hypotonia, progressive spasticity, seizures, secondary microcephaly and no developmental progress) in seven infants from three kindreds with a homozygous G23V PLAA mutation. PLAA is an ubiquitiously expressed and highly conserved ubiquitin-binding adaptor protein implicated in proteostasis. A mouse Plaa knockout was embyonically lethal but using CRISPR gene editing we recreated an allelic G23V series of Plaa mouse mutants leading to early onset neural dysfunction and death. Unlike in yeast, mammalian Plaa mutant cells do not globally affect free ubiquitin homeostasis but show defects in the capture and processing of ubiquitinated-membrane cargo for concentration into functional MVBs disrupting basal macroautophagy.