Krabbe disease (KD) is an autosomal recessive neurodegenerative disorder caused by defective β-galactosylceramidase (GALC), a lysosomal enzyme responsible for cleavage of several key substrates including psychosine. Accumulation of psychosine to the cytotoxic levels in KD patients is thought to cause dysfunctions in myelinating glial cells based on a comprehensive study of demyelination in KD. However, recent evidence suggests myelin-independent neuronal death in the murine model of KD, thus indicating defective GALC in neurons as an autonomous mechanism for neuronal cell death in KD. These observations prompted us to generate induced neurons (iNeurons) from two adult-onset KD patients carrying compound heterozygous mutations (p.[K563*];[L634S]) and (p.[N228_S232delinsTP];[G286D]) to determine the direct contribution of autonomous neuronal toxicity to KD. Here we report that directly converted KD iNeurons showed not only diminished GALC activity and increased psychosine levels, as expected, but also neurite fragmentation and abnormal neuritic branching. The lysosomal-associated membrane proteins 1 (LAMP1) was expressed at higher levels than controls, LAMP1-positive vesicles were significantly enlarged and fragmented, and mitochondrial morphology and its function were altered in KD iNeurons. Strikingly, we demonstrated that psychosine was sufficient to induce neurite defects, mitochondrial fragmentation, and lysosomal alterations in iNeurons derived in healthy individuals, thus establishing the causal effect of the cytotoxic GALC substrate in KD and the autonomous neuronal toxicity in KD pathology.