Heat shock protein 70 (Hsp70) is an evolutionarily highly conserved molecular chaperone that promotes the survival of stressed cells by inhibiting lysosomal membrane permeabilization, a hallmark of stress-induced cell death. Clues to its molecular mechanism of action may lay in the recently reported stress- and cancer-associated translocation of a small portion of Hsp70 to the lysosomal compartment. Here we show that Hsp70 stabilizes lysosomes by binding to an endolysosomal anionic phospholipid bis(monoacylglycero)phosphate (BMP), an essential co-factor for lysosomal sphingomyelin metabolism. In acidic environments Hsp70 binds with high affinity and specificity to BMP, thereby facilitating the BMP binding and activity of acid sphingomyelinase (ASM). The inhibition of the Hsp70-BMP interaction by BMP antibodies or a point mutation in Hsp70 (Trp90Phe), as well as the pharmacological and genetic inhibition of ASM, effectively revert the Hsp70-mediated stabilization of lysosomes. Notably, the reduced ASM activity in cells from patients with Niemann-Pick disease (NPD) A and B-severe lysosomal storage disorders caused by mutations in the sphingomyelin phosphodiesterase 1 gene (SMPD1) encoding for ASM-is also associated with a marked decrease in lysosomal stability, and this phenotype can be effectively corrected by treatment with recombinant Hsp70. Taken together, these data open exciting possibilities for the development of new treatments for lysosomal storage disorders and cancer with compounds that enter the lysosomal lumen by the endocytic delivery pathway.