Ca2+ is the most ubiquitous second messenger in neurons whose spatial and temporal elevations are tightly controlled to initiate and orchestrate diverse intracellular signaling cascades. Numerous neuropathologies result from mutations or alterations in Ca2+ handling proteins; thus, elucidating molecular pathways that shape Ca2+ signaling is imperative. Here, we report that loss-of-function, knockout, or neurodegenerative disease–causing mutations in the lysosomal cholesterol transporter, Niemann-Pick Type C1 (NPC1), initiate a damaging signaling cascade that alters the expression and nanoscale distribution of IP3R type 1 (IP3R1) in endoplasmic reticulum membranes. These alterations detrimentally increase Gq-protein coupled receptor–stimulated Ca2+ release and spontaneous IP3R1 Ca2+ activity, leading to mitochondrial Ca2+ cytotoxicity. Mechanistically, we find that SREBP-dependent increases in Presenilin 1 (PS1) underlie functional and expressional changes in IP3R1. Accordingly, expression of PS1 mutants recapitulate, while PS1 knockout abrogates Ca2+ phenotypes. These data present a signaling axis that links the NPC1 lysosomal cholesterol transporter to the damaging redistribution and activity of IP3R1 that precipitates cell death in NPC1 disease and suggests that NPC1 is a nanostructural disease.