Mutations in the polytopic lysosomal membrane glycoprotein CLN3 result in a severe neurodegenerative disorder. Previous studies identified two cytosolic signal structures contributing to lysosomal targeting. We now examined the role of glycosylation and the C‐terminal CAAX motif in lysosomal transport of CLN3 in non‐neuronal and neuronal cells. Mutational analysis revealed that in COS7 cells, CLN3 is glycosylated at asparagine residues 71 and 85. Both partially and non‐glycosylated CLN3 were transported correctly to lysosomes. Mevalonate incorporation and farnesyltransferase inhibitor studies indicate that CLN3 is prenylated most likely at cysteine 435. Substitution of cysteine 435 reduced the steady‐state level of CLN3 in lysosomes most likely because of impaired sorting in early endosomal structures, particularly in neuronal cells. Additionally, the cell surface expression of CLN3 was increased in the presence of farnesyltransferase inhibitors. Alteration of the spacing between the transmembrane domain and the CAAX motif or the substitution of the entire C‐terminal domain of CLN3 with cytoplasmic tails of mannose 6‐phosphate receptors have demonstrated the importance of the C‐terminal domain of proper length and composition for exit of the endoplasmic reticulum. The data suggest that co‐operative signal structures in different cytoplasmic domains of CLN3 are required for efficient sorting and for transport to the lysosome.