Rab GTPases are molecular switches that orchestrate vesicular trafficking, maturation and fusion by cycling between an active, GTP-bound form, and an inactive, GDP-bound form. The activity cycle is coupled to GTP hydrolysis and is tightly controlled by regulatory proteins. Missense mutations of the GTPase Rab7 cause a dominantly inherited axonal degeneration known as Charcot-Marie-Tooth type 2B through an unknown mechanism. We present the 2.8 A crystal structure of GTP-bound L129F mutant Rab7 which reveals normal conformations of the effector binding regions and catalytic site, but an alteration to the nucleotide binding pocket that is predicted to alter GTP binding. Through extensive biochemical analysis, we demonstrate that disease-associated mutations in Rab7 do not lead to an intrinsic GTPase defect, but permit unregulated nucleotide exchange leading to both excessive activation and hydrolysis-independent inactivation. Consistent with augmented activity, mutant Rab7 shows significantly enhanced interaction with a subset of effector proteins. In addition, dynamic imaging demonstrates that mutant Rab7 is abnormally retained on target membranes. However, we show that the increased activation of mutant Rab7 is counterbalanced by unregulated, GTP hydrolysis-independent membrane cycling. Notably, disease mutations are able to rescue the membrane cycling of a GTPase-deficient mutant. Thus, we demonstrate that disease mutations uncouple Rab7 from the spatial and temporal control normally imposed by regulatory proteins and cause disease not by a gain of novel toxic function, but by misregulation of native Rab7 activity.