G4C2 repeat expansions in an intron of C9ORF72 cause the most common familial amyotrophic lateral sclerosis and frontotemporal dementia (collectively, C9ALS/FTD). Mechanisms and mediators of C9ALS/FTD pathogenesis remain poorly understood. C9orf72 and Smcr8 form a protein complex. Here, we show that expression of Smcr8, like C9orf72, is reduced in C9ALS/FTD mouse models and patient tissues. Since Smcr8 is highly conserved between human and mouse, we evaluated the effects of Smcr8 downregulation in mice. Smcr8 knockout (KO) mice exhibited motor behavior deficits, which resemble those of C9ALS/FTD mouse models, and displayed axonal swellings in their spinal cords and neuromuscular junctions. These deficits are caused by impaired autophagy-lysosomal functions due to disrupted axonal transport in mutant motor neurons. Consistent with its interaction with C9orf72 and their downregulation in patient tissues, Smcr8 deficiency exacerbated autophagy-lysosomal impairment in C9orf72 KO mice. The disease relevance of Smcr8 downregulation was reflected by exacerbated axonal swellings and gain of toxicity pathology arising from Smcr8 haploinsufficiency in a mouse model of C9ALS/FTD. Thus, our in vivo studies suggested that Smcr8 deficiency impairs axonal transport dependent autophagy-lysosomal function and exacerbates axonal degeneration and gain of toxicity in C9ALS/FTD mouse models.