Frontotemporal dementia and amyotrophic lateral sclerosis are clinically and pathologically overlapping disorders with shared genetic causes. We previously identified a disease locus on chromosome 16p12.1-q12.2 with genome-wide significant linkage in a large European Australian family with autosomal dominant inheritance of frontotemporal dementia and amyotrophic lateral sclerosis and no mutation in known amyotrophic lateral sclerosis or dementia genes. Here we demonstrate the segregation of a novel missense variant in CYLD (c.2155A>G, p.M719V) within the linkage region as the genetic cause of disease in this family. Immunohistochemical analysis of brain tissue from two CYLD p.M719V mutation carriers showed widespread glial CYLD immunoreactivity. Primary mouse neurons transfected with CYLDM719V exhibited increased cytoplasmic localization of TDP-43 and shortened axons. CYLD encodes a lysine 63 deubiquitinase and CYLD cutaneous syndrome, a skin tumour disorder, is caused by mutations that lead to reduced deubiquitinase activity. In contrast with CYLD cutaneous syndrome-causative mutations, CYLDM719V exhibited significantly increased lysine 63 deubiquitinase activity relative to the wild-type enzyme (paired Wilcoxon signed-rank test P = 0.005). Overexpression of CYLDM719V in HEK293 cells led to more potent inhibition of the cell signalling molecule NF-κB and impairment of autophagosome fusion to lysosomes, a key process in autophagy. Although CYLD mutations appear to be rare, CYLD’s interaction with at least three other proteins encoded by frontotemporal dementia and/or amyotrophic lateral sclerosis genes (TBK1, OPTN and SQSTM1) suggests that it may play a central role in the pathogenesis of these disorders. Mutations in several frontotemporal dementia and amyotrophic lateral sclerosis genes, including TBK1, OPTN and SQSTM1, result in a loss of autophagy function. We show here that increased CYLD activity also reduces autophagy function, highlighting the importance of autophagy regulation in the pathogenesis of frontotemporal dementia and amyotrophic lateral sclerosis.