The small GTPase Rab7 is a key regulator of endosomal maturation in eukaryotic cells. Mutations in rab7 are thought to cause the dominant neuropathy Charcot-Marie-Tooth 2B (CMT2B) by a gain-of-function mechanism. Here we show that loss of rab7, but not overexpression of rab7 CMT2B mutants, causes adult-onset neurodegeneration in a Drosophila model. All CMT2B mutant proteins retain 10-50% function based on quantitative imaging, electrophysiology, and rescue experiments in sensory and motor neurons in vivo. Consequently, expression of CMT2B mutants at levels between 0.5 and 10-fold their endogenous levels fully rescues the neuropathy-like phenotypes of the rab7 mutant. Live imaging reveals that CMT2B proteins are inefficiently recruited to endosomes, but do not impair endosomal maturation. These findings are not consistent with a gain-of-function mechanism. Instead, they indicate a dosage-dependent sensitivity of neurons to rab7-dependent degradation. Our results suggest a therapeutic approach opposite to the currently proposed reduction of mutant protein function. DOI: http://dx.doi.org/10.7554/eLife.01064.001.