Megalencephalic leukoencephalopathy with subcortical cysts is a genetic brain disorder with onset in early childhood. Affected infants develop macrocephaly within the first year of life, after several years followed by slowly progressive, incapacitating cerebellar ataxia and spasticity. From early on, MRI shows diffuse signal abnormality and swelling of the cerebral white matter, with evidence of highly increased white matter water content. In most patients, the disease is caused by mutations in the gene MLC1, which encodes a plasma-membrane protein almost exclusively expressed in brain and at lower levels in leukocytes. Within the brain, MLC1 is mainly located in astrocyte-astrocyte junctions adjacent to the blood-brain and cerebrospinal fluid-brain barriers. Thus far, the function of MLC1 has remained unknown. We tested the hypothesis that MLC1 mutations cause a defect in ion currents involved in water and ion homeostasis, causing the cerebral white matter oedema. Using whole-cell patch-clamp studies we demonstrated an association between MLC1 expression and anion channel activity in different cell types, most importantly astrocytes. The currents were absent in chloride-free medium and in cells with disease-causing MLC1 mutations. MLC1-dependent currents were greatly enhanced by hypotonic pretreatment causing cell swelling, while ion channel blockers, including Tamoxifen, abolished the currents. Down-regulation of endogenous MLC1 expression in astrocytes by small interfering RNA greatly reduced the activity of this channel, which was rescued by overexpression of normal MLC1. The current-voltage relationship and the pharmacological profiles of the currents indicated that the channel activated by MLC1 expression is a volume-regulated anion channel. Such channels are involved in regulatory volume decrease. We showed that regulatory volume decrease was hampered in lymphoblasts from MLC patients. A similar trend was observed in astrocytes with decreased MLC1 expression; this effect was rescued by overexpression of normal MLC1. In the present study we show that absence or mutations of the MLC1 protein negatively impact both volume-regulated anion channel activity and regulatory volume decrease, indicating that MLC is caused by a disturbance of cell volume regulation mediated by chloride transport.