The most common inherited form of Frontotemporal Lobar Degeneration (FTLD) known stems from Progranulin (GRN) mutation and exhibits TDP-43 plus ubiquitin aggregates. Despite the causative role of GRN haploinsufficiency in FTLD-TDP, the neurobiology of this secreted glycoprotein is unclear. Here, we examined PGRN binding to the cell surface. PGRN binds to cortical neurons via its C terminus, and unbiased expression cloning identifies Sortilin (Sort1) as a binding site. Sort1^−/− neurons exhibit reduced PGRN binding. In the CNS, Sortilin is expressed by neurons and PGRN is most strongly expressed by activated microglial cells after injury. Sortilin rapidly endocytoses and delivers PGRN to lysosomes. Mice lacking Sortilin have elevations in brain and serum PGRN levels of 2.5- to 5-fold. The 50% PGRN decrease causative in FTLD-TDP cases is mimicked in GRN^+/− mice, and is fully normalized by Sort1 ablation. Sortilin-mediated PGRN endocytosis is likely to play a central role in FTLD-TDP pathophysiology.