The mannose-6-phosphate (M6P) biosynthetic pathway for lysosome biogenesis has been studied for decades and is considered a well-understood topic. However, whether this pathway is regulated remains an open question. In a genome-wide CRISPR/Cas9 knockout screen, we discover TMEM251 as the first regulator of the M6P modification. Deleting TMEM251 causes mistargeting of most lysosomal enzymes due to their loss of M6P modification and accumulation of numerous undigested materials. We further demonstrate that TMEM251 localizes to the Golgi and is required for the cleavage and activity of GNPT, the enzyme that catalyzes M6P modification. In zebrafish, TMEM251 deletion leads to severe developmental defects including heart edema and skeletal dysplasia, which phenocopies Mucolipidosis Type II. Our discovery provides a mechanism for the newly discovered human disease caused by TMEM251 mutations. We name TMEM251 as GNPTAB cleavage and activity factor (GCAF) and its related disease as Mucolipidosis Type V.