Hereditary axonopathies are frequently caused by mutations in proteins that reside in the endoplasmic reticulum (ER). Which of the many ER functions are pathologically relevant, however, remains to be determined. REEP1 is an ER protein mutated in hereditary spastic paraplegia (HSP) and hereditary motor neuropathy (HMN). We found that HSP-associated missense variants at the N-terminus of REEP1 abolish ER targeting, whereas two more central variants are either rare benign SNPs or confer pathogenicity via a different mechanism. The mis-targeted variants accumulate at lipid droplets (LDs). N-terminal tagging, deletion of the N-terminus, and expression of a minor REEP1 isoform had the same effect. We also confirmed an increase in LD size upon cooverexpression of atlastins and REEP1. Neither wild-type REEP1, LD-targeted HSP variants, nor a non-LD-targeted HMN variant reproduced this effect when expressed alone. We conclude that the N-terminus of REEP1 is necessary for proper targeting to and/or retention in the ER. The protein's potential to also associate with LDs corroborates a synergistic effect with atlastins on LD size. Interestingly, LD size is also altered upon knockdown of seipin, mutations of which also cause HSP and HMN. Regulation of LDs may thus be an ER function critical for long-term axonal maintenance.