Fragile X Syndrome (FXS) is the most prevalent cause of inherited mental deficiency and is the most common monogenetic cause of autism spectral disorder (ASD). Here, we demonstrate that disease-causing missense mutations in the conserved K homology (KH) RNA binding domains (RBDs) of FMRP cause defects in its ability to form RNA transport granules in neurons. Using molecular, genetic, and imaging approaches in the Drosophila FXS model system, we show that the KH1 and KH2 domains of FMRP regulate distinct aspects of neuronal FMRP granule formation, dynamics, and transport. Furthermore, mutations in the KH domains disrupt translational repression in cells and the localization of known FMRP target mRNAs in neurons. These results suggest that the KH domains play an essential role in neuronal FMRP granule formation and function which may be linked to the molecular pathogenesis of FXS.