The dynein motor protein complex is required for retrograde transport but the functions of the intermediate-light chains that form the cargo-binding complex are not elucidated and the importance of individual subunits in maintaining cellular homeostasis is unknown. Here, using mRNA arrays and protein analysis, we show that the dynein subunit, DYNC1LI2 (dynein, cytoplasmic 1 light intermediate chain 2) is downregulated in cystinosis, a lysosomal storage disorder caused by genetic defects in CTNS (cystinosin, lysosomal cystine transporter). Reconstitution of DYNC1LI2 expression in ctns-/- cells reestablished endolysosomal dynamics. Defective vesicular trafficking in cystinotic cells was rescued by DYNC1LI2 expression which correlated with decreased endoplasmic reticulum stress manifested as decreased expression levels of the chaperone HSPA5/GRP78, and the transcription factors ATF4 and DDIT3/CHOP. Mitochondrial fragmentation, membrane potential and endolysosomal-mitochondrial association in cystinotic cells were rescued by DYNC1LI2. Survival of cystinotic cells to oxidative stress was increased by DYNC1LI2 reconstitution but not by its paralog DYNC1LI1, which also failed to decrease ER stress and mitochondrial fragmentation. DYNC1LI2 expression rescued the localization of the chaperone-mediated autophagy (CMA) receptor LAMP2A, CMA activity, cellular homeostasis and LRP2/megalin expression in cystinotic proximal tubule cells, the primary cell type affected in cystinosis. DYNC1LI2 failed to rescue phenotypes in cystinotic cells when LAMP2A was downregulated or when co-expressed with dominant negative (DN) RAB7 or DN-RAB11, which impaired LAMP2A trafficking. DYNC1LI2 emerges as a regulator of cellular homeostasis and potential target to repair underlying trafficking and CMA in cystinosis, a mechanism that is not restored by lysosomal cystine depletion therapies.Abbreviations: ACTB: actin, beta; ATF4: activating transcription factor 4; CMA: chaperone-mediated autophagy; DYNC1LI1: dynein cytoplasmic 1 light intermediate chain 1; DYNC1LI2: dynein cytoplasmic 1 light intermediate chain 2; ER: endoplasmic reticulum; LAMP1: lysosomal associated membrane protein 1; LAMP2A: lysosomal associated membrane protein 2A; LIC: light-intermediate chains; LRP2/Megalin: LDL receptor related protein 2; PTCs: proximal tubule cells; RAB: RAB, member RAS oncogene family; RAB11FIP3: RAB11 family interacting protein 3; RILP: Rab interacting lysosomal protein.