SUMMARYAs the primary phagocytic cells of the central nervous system, microglia exquisitely regulate their lysosomal activity to facilitate brain development and homeostasis. However, mechanisms that coordinate lysosomal activity with microglia development, migration, and function remain unclear. Here we show that embryonic macrophages require the lysosomal GTPase RagA and the GTPase-activating protein Folliculin (Flcn) for colonization of the brain. Mutants lacking RagA and Flcn have nearly identical phenotypes, suggesting that RagA and Flcn act in concert in developing microglia. Furthermore, we demonstrate that RagA and Flcn repress the key lysosomal transcription factor Tfeb, and its homologs Tfe3a and Tfe3b, in macrophages. Accordingly, defects in rraga mutants can be restored by simultaneous mutations in tfeb, tfe3a, and tfe3b, and overexpression of tfe3b in the macrophage lineage recapitulates the major defects observed in rraga and flcn mutants. Collectively, our data define a lysosomal regulatory circuit that is essential for early development of microglia.