Juvenile neuronal ceroid lipofuscinosis (JNCL) is a fatal childhood-onset neurodegenerative disorder caused by mutations in ceroid lipofuscinosis neuronal-3 (CLN3), a hydrophobic transmembrane protein of unresolved function. Previous studies indicate blood–brain barrier (BBB) defects in JNCL, and our earlier report showed prominent Cln3 expression in mouse brain endothelium. Here we find that CLN3 is necessary for normal trafficking of the microdomain-associated proteins caveolin-1, syntaxin-6, and multidrug resistance protein 1 (MDR1) in brain endothelial cells. Correspondingly, CLN3-null cells have reduced caveolae, and impaired caveolae- and MDR1-related functions including endocytosis, drug efflux, and cell volume regulation. We also detected an abnormal blood–brain barrier response to osmotic stress in vivo. Evaluation of the plasma membrane with fluorescent sphingolipid probes suggests microdomain destabilization and enhanced fluidity in CLN3-null cells. In further work we found that application of the glycosphingolipid lactosylceramide to CLN3-deficient cells rescues protein transport and caveolar endocytosis. Last, we show that CLN3 localizes to the trans-Golgi network (TGN) and partitions with buoyant microdomain fractions. We propose that CLN3 facilitates TGN-to-plasma membrane transport of microdomain-associated proteins. Insult to this pathway may underlie BBB dysfunction and contribute to JNCL pathogenesis.