Hereditary spastic paraplegias (HSPs) are a group of inherited, progressive neurodegenerative conditions characterised by prominent lower-limb spasticity and weakness, caused by a length-dependent degeneration of the longest corticospinal upper motor neurons. While more than 80 spastic paraplegia genes (SPGs) have been identified, many cases arise from mutations in genes encoding proteins which generate and maintain tubular endoplasmic reticulum (ER) membrane organisation. The ER-shaping proteins are essential for the health and survival of long motor neurons, however the mechanisms by which mutations in these genes cause the axonopathy observed in HSP have not been elucidated. To further develop our understanding of the ER-shaping proteins, this study outlines the generation of novel in vivo and in vitro models, using CRISPR/Cas9-mediated gene editing to knockout the ER-shaping protein ADP-ribosylation factor-like 6 interacting protein 1 (ARL6IP1), mutations in which give rise to the HSP subtype SPG61. Loss of Arl6IP1 in Drosophila results in progressive locomotor deficits, emulating a key aspect of HSP in patients. ARL6IP1 interacts with ER-shaping proteins and is required for regulating the organisation of ER tubules, particularly within long motor neuron axons. Unexpectedly, we identified physical and functional interactions between ARL6IP1 and the phospholipid transporter oxysterol-binding protein-related protein 8 in both human and Drosophila model systems, pointing to a conserved role for ARL6IP1 in lipid homeostasis. Furthermore, loss of Arl6IP1 from Drosophila neurons results in a cell non-autonomous accumulation of lipid droplets in axonal glia. Importantly, treatment with lipid regulating liver X receptor-agonists blocked lipid droplet accumulation, restored axonal ER organisation, and improved locomotor function in Arl6IP1 knockout Drosophila. Our findings indicate that disrupted lipid homeostasis contributes to neurodegeneration in HSP, identifying a potential novel therapeutic avenue for the treatment of this disorder.