Differentiation is critical for cell fate decisions, but the signals involved remain unclear. The kidney proximal tubule (PT) cells reabsorb disulphide-rich proteins through endocytosis, generating cystine via lysosomal proteolysis. Here we report that defective cystine mobilization from lysosomes through cystinosin (CTNS), which is mutated in cystinosis, diverts PT cells towards growth and proliferation, disrupting their functions. Mechanistically, cystine storage stimulates Ragulator-Rag GTPase-dependent recruitment of mechanistic target of rapamycin complex 1 (mTORC1) and its constitutive activation. Re-introduction of CTNS restores nutrient-dependent regulation of mTORC1 in knockout cells, whereas cell-permeant analogues of L-cystine, accumulating within lysosomes, render wild-type cells resistant to nutrient withdrawal. Therapeutic mTORC1 inhibition corrects lysosome and differentiation downstream of cystine storage, and phenotypes in preclinical models of cystinosis. Thus, cystine serves as a lysosomal signal that tailors mTORC1 and metabolism to direct epithelial cell fate decisions. These results identify mechanisms and therapeutic targets for dysregulated homeostasis in cystinosis.