ORP1L is a member of the human oxysterol-binding protein (OSBP) family. ORP1L localizes to late endosomes (LEs)/lysosomes, colocalizing with the GTPases Rab7 and Rab9 and lysosome-associated membrane protein-1. We demonstrate that ORP1L interacts physically with Rab7, preferentially with its GTP-bound form, and provide evidence that ORP1L stabilizes GTP-bound Rab7 on LEs/lysosomes. The Rab7-binding determinant is mapped to the ankyrin repeat (ANK) region of ORP1L. The pleckstrin homology domain (PHD) of ORP1L binds phosphoinositides with low affinity and specificity. ORP1L ANK- and ANK+PHD fragments induce perinuclear clustering of LE/lysosomes. This is dependent on an intact microtubule network and a functional dynein/dynactin motor complex. The dominant inhibitory Rab7 mutant T22N reverses the LE clustering, suggesting that the effect is dependent on active Rab7. Transport of fluorescent dextran to LEs is inhibited by overexpression of ORP1L. Overexpression of ORP1L, and in particular the N-terminal fragments of ORP1L, inhibits vacuolation of LE caused by Helicobacter pylori toxin VacA, a process also involving Rab7. The present study demonstrates that ORP1L binds to Rab7, modifies its functional cycle, and can interfere with LE/lysosome organization and endocytic membrane trafficking. This is the first report of a direct connection between the OSBP-related protein family and the Rab GTPases.