Targeting soluble acid hydrolases to lysosomes requires the addition of mannose 6-phosphate residues on their N-glycans. This process is initiated by GlcNAc-1-phosphotransferase, a multi-subunit enzyme encoded by the GNPTAB and GNPTG genes. The GNPTAB gene products (the α and β subunits) are responsible for recognition and catalysis of hydrolases whereas the GNPTG gene product (the γ subunit) enhances mannose phosphorylation of a subset of hydrolases. Here we identify and characterize a zebrafish gnptg insertional mutant and show that loss of the gamma subunit reduces mannose phosphorylation on a subset glycosidases but does not affect modification of several cathepsin proteases. We further show that glycosidases, but not cathepsins, are hypersecreted from gnptg−/− embryonic cells, as evidenced by reduced intracellular activity and increased circulating serum activity. The gnptg−/− embryos lack the gross morphological or craniofacial phenotypes shown in gnptab-deficient morphant embryos to result from altered cathepsin activity. Despite the lack of overt phenotypes, decreased fertilization and embryo survival were noted in mutants, suggesting that gnptg associated deposition of mannose 6-phosphate modified hydrolases into oocytes is important for early embryonic development. Collectively, these findings demonstrate that loss of the zebrafish GlcNAc-1-phosphotransferase γ subunit causes enzyme-specific effects on mannose phosphorylation. The finding that cathepsins are normally modified in gnptg−/− embryos is consistent with data from gnptab-deficient zebrafish suggesting these proteases are the key mediators of acute pathogenesis. This work also establishes a valuable new model that can be used to probe the functional relevance of GNPTG mutations in the context of a whole animal.