Although neurologic symptoms occur in two-thirds of lysosomal storage disorders (LSDs), for most we do not understand the mechanisms underlying brain dysfunction. A major unanswered question is if the pathogenic hallmark of LSDs, storage accumulation, induces functional defects directly or is a disease bystander. Also, for most LSDs we do not know the impact of loss-of-function in individual cell types. Understanding these critical questions are essential to therapy development. Here, we determined the impact of genetic rescue in distinct cell types on neural circuit dysfunction in CLN3 disease, the most common pediatric dementia and a representative LSD. We restored Cln3 expression via AAV-mediated gene delivery and conditional genetic rescue in a CLN3 mouse model. Surprisingly, we found that low-level rescue of Cln3 expression in neurons alone normalized clinically-relevant electrophysiologic markers of network dysfunction, despite the presence of substantial residual histopathology, in contrast to restoring expression in astrocytes. Thus loss of Cln3 function in neurons, not storage accumulation, underlies neurologic dysfunction in CLN3 disease, implying that storage clearance may be an inappropriate target for therapy development and an ineffectual biomarker.