SPNS1 is a lysosomal transporter that mediates the salvage of lysoglycerophospholipids, the degradative products of lysosomal phospholipid catabolism. However, an understanding of the role of lysolipid transport and salvage in regulating cellular lipid homeostasis and in disease is lacking. Here, we identified members of 2 families with biallelic SPNS1 loss-of-function variants, who presented primarily with progressive liver and striated muscle injury. Patients' fibroblasts accumulated lysophospholipids including lysoplasmalogens and cholesterol in lysosomes with reduced cellular plasmalogens. Notably, SPNS1 deficiency resulted in reduced biogenesis of cytosolic lipid droplets containing triglycerides and cholesteryl esters. Mechanistically, we found that lysophospholipids transported by SPNS1 into the cytosol quantitatively contributed to triglyceride synthesis, whereas lysosomal buildup of lyso-ether-phospholipid inhibited lysosomal cholesterol egress, effects that were enhanced with inhibition of mTOR. These findings support a gene-disease association and reveal connectivity between lysosomal transport of lysophospholipids and storage of reserve cellular energy as triglycerides and the regulation of cholesterol homeostasis, processes that become important under nutrient limitation.