Juvenile Batten disease (juvenile neuronal ceroid lipofuscinosis, JNCL) is a devastating neurodegenerative disease caused by mutations in CLN3, a protein of undefined function. Cell lines derived from patients or mice with CLN3 deficiency have impairments in actin-regulated processes such as endocytosis, autophagy, vesicular trafficking, and cell migration. Here we demonstrate the small GTPase Cdc42 is misregulated in the absence of CLN3, and thus may be a common link to multiple cellular defects. We discover that active Cdc42 (Cdc42-GTP) is elevated in endothelial cells from CLN3 deficient mouse brain, and correlates with enhanced PAK-1 phosphorylation, LIMK membrane recruitment, and altered actin-driven events. We also demonstrate dramatically reduced plasma membrane recruitment of the Cdc42 GTPase activating protein, ARHGAP21. In line with this, GTP-loaded ARF1, an effector of ARHGAP21 recruitment, is depressed. Together these data implicate misregulated ARF1-Cdc42 signaling as a central defect in JNCL cells, which in-turn impairs various cell functions. Furthermore our findings support concerted action of ARF1, ARHGAP21, and Cdc42 to regulate fluid phase endocytosis in mammalian cells. The ARF1-Cdc42 pathway presents a promising new avenue for JNCL therapeutic development.