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Progranulin (PGRN) is a glycoprotein implicated in several neurodegenerative diseases. It is highly expressed in microglia and macrophages and can be secreted or delivered to the lysosome compartment. PGRN comprises 7.5 granulin repeats and is processed into individual granulin peptides within the lysosome, but the functions of these peptides are largely unknown. Here, we identify CD68, a lysosome membrane protein mainly expressed in hematopoietic cells, as a binding partner of PGRN and PGRN-derived granulin E. Deletion analysis of CD68 showed that this interaction is mediated by the mucin–proline-rich domain of CD68. While CD68 deficiency does not affect the lysosomal localization of PGRN, it results in a specific decrease in the levels of granulin E but no other granulin peptides. On the other hand, the deficiency of PGRN, and its derivative granulin peptides, leads to a significant shift in the …