CLN7 disease is a neurodegenerative lysosomal storage disorder caused by defects in MFSD8. The clinical variability of CLN7 disease and the impact of various mutations on protein turnover, localization, and function of CLN7 remain poorly understood. Since the effects of nonsense and deletion mutations on the subcellular distribution and function of CLN7 are unknown, mutations located at the N-terminus and C-terminus were analyzed. Our analyses of protein expression and post-translational modifications, such as proteolytic cleavage and oligosaccharide processing, along with double immunofluorescence analyses, demonstrated that the nonsense mutations p.Q206X, p.W456X, p.Q474X, and p.R482X, or the in-frame deletion mutation p.V109_I113del, resulted in decreased protein levels and showed mistargeting and ER retention as the primary cause for loss of CLN7 function. We also investigated several missense mutations clustered in transmembrane domain 11 (TMD11) that affect conserved residues, which are believed to be important for CLN7 function. Analysis of protein levels, complex type N-glycosylation, proteolytic cleavage in lysosomes, and colocalization with lysosomal marker proteins in double immunofluorescence analyses showed that patient mutations p.T458L, p.R465Q, and p.R465W did not affect protein stability or correct lysosomal targeting of CLN7, indicating functional impairment. Since the precise function of CLN7 in lysosomes is unknown, the generation of an enlarged endosome phenotype (EEP) to study CLN7 function in cells expressing wild-type and mutant CLN7 was used. In contrast to the luminally located missense mutation T294K, missense mutations in TMD11 did not block the generation of an EEP. The effects of missense mutations in TMD11 on CLN7 function remain to be investigated. In summary, our study revealed mistargeting and ER retention of nonsense and in-frame deletion mutations in MFSD8 as a cause of CLN7 disease, variant late-infantile phenotype.