Intracellular accumulation of lipids and swollen dysfunctional lysosomes are linked to several neurodegenerative diseases, including lysosomal storage disorders (LSD). Detailed characterization of lipid metabolic changes in relation to the onset and progression of neurodegeneration is currently missing. We systematically analyzed lipid perturbations in spinster (spin) mutants, a Drosophila model of LSD-like neurodegeneration. Our results highlight an imbalance in brain ceramide and sphingosine in the early stages of neurodegeneration, preceding the accumulation of endomembranous structures, manifestation of altered behavior, and buildup of lipofuscin. Manipulating levels of ceramidase and altering these lipids in spin mutants allowed us to conclude that ceramide homeostasis is the driving force in disease progression and is integral to spin function in the adult nervous system. We identified 29 novel physical interaction partners of Spin and focused on the lipid carrier protein, Lipophorin (Lpp). A subset of Lpp and Spin colocalize in the brain and within organs specialized for lipid metabolism (fat bodies and oenocytes). Reduced Lpp protein was observed in spin mutant tissues. Finally, increased levels of lipid metabolites produced by oenocytes in spin mutants allude to a functional interaction between Spin and Lpp, underscoring the systemic nature of lipid perturbation in LSD.