Unraveling the mechanistic link connecting the multiple RNA-binding proteins (RBPs) associated with amyotrophic lateral sclerosis (ALS) is critical for identifying novel therapeutics. Mutations in the RBP FUS cause the third most common genetic form of ALS. Here, we show that motor neurons (MNs) of FUS-ALS patients manifest heterogeneous levels of cytoplasmic FUS. Using neurons differentiated from induced pluripotent stem cells (iPSCs) carrying a FUS-eGFP reporter, we demonstrate that pronounced cytoplasmic FUS mislocalization is linked to aberrant protein degradation. We also show that the P525L FUS mutation reduces the interaction of FUS with RBPs, including hnRNPA1, hnRNPA2B1, EWSR1, and TAF15, facilitating FUS aggregation. Additionally, RBP levels are decreased, inducing neurodegeneration. We use patient spinal cord to demonstrate that MNs containing aggregated FUS have reduced RBP content compared to MNs lacking FUS aggregates. Finally, we demonstrate that small molecules inducing autophagy, including PQR309, a brain penetrant compound in clinical trials, restore proteostasis.