Progranulin (PGRN), encoded by the GRN gene in humans, is a secreted growth factor implicated in a multitude of processes ranging from regulation of inflammation to wound healing and tumorigenesis. The clinical importance of PGRN became especially evident in 2006, when heterozygous mutations in the GRN gene, resulting in haploinsufficiency, were found to be one of the main causes of frontotemporal lobar degeneration (FTLD). FTLD is a clinically heterogenous disease that results in the progressive atrophy of the frontal and temporal lobes of the brain. Despite significant research, the exact function of PGRN and its mechanistic relationship to FTLD remain unclear. However, growing evidence suggests a role for PGRN in the lysosome-most striking being that homozygous GRN mutation leads to neuronal ceroid lipofuscinosis, a lysosomal storage disease. Since this discovery, several links between PGRN and the lysosome have been established, including the existence of two independent lysosomal trafficking pathways, intralysosomal processing of PGRN into discrete functional peptides, and direct and indirect regulation of lysosomal hydrolases. Here, we summarize the cellular functions of PGRN, its roles in the nervous system, and its link to multiple neurodegenerative diseases, with a particular focus dedicated to recent lysosome-related mechanistic developments.