Endolysosomal organelles play a key role in trafficking, breakdown and receptor-mediated recycling of different macromolecules such as low-density lipoprotein (LDL)-cholesterol, epithelial growth factor (EGF) or transferrin. Here we examine the role of two-pore channel (TPC) 2, an endolysosomal cation channel, in these processes. Embryonic mouse fibroblasts and hepatocytes lacking TPC2 display a profound impairment of LDL-cholesterol and EGF/EGF-receptor trafficking. Mechanistically, both defects can be attributed to a dysfunction of the endolysosomal degradation pathway most likely on the level of late endosome to lysosome fusion. Importantly, endolysosomal acidification or lysosomal enzyme function are normal in TPC2-deficient cells. TPC2-deficient mice are highly susceptible to hepatic cholesterol overload and liver damage consistent with non-alcoholic fatty liver hepatitis. These findings indicate reduced metabolic reserve of hepatic cholesterol handling. Our results suggest that TPC2 plays a crucial role in trafficking in the endolysosomal degradation pathway and, thus, is potentially involved in the homoeostatic control of many macromolecules and cell metabolites.