Autosomal-dominant Stargardt-like macular dystrophy [Stargardt3 (STGD3)] results from single allelic mutations in the elongation of very-long-chain fatty acids-like 4 (ELOVL4), whereas recessive mutations lead to skin and brain dysfunction. ELOVL4 protein localizes to the endoplasmic reticulum, where it mediates the condensation reaction catalyzing the formation of very-long-chain (VLC) (C-28 to C-40) fatty acids, saturated and polyunsaturated (PUFA). The defective gene product is truncated at the C terminus, leading to mislocalization and aggregation in other organelles. We hypothesized that the STGD3 truncated mutant may generate mislocalized, and therefore toxic, keto intermediates of fatty acid elongation, thereby contributing to the disease process. Using cell-based and cell-free microsome assays, we found that the truncated protein lacked innate condensation activity. Coexpression of different forms of wild-type and mutant ELOVL4 revealed a large dominant-negative effect of mutant protein on ELOVL4 localization and enzymatic activity, resulting in reduced VLC-PUFA synthesis. The reduction in VLC-PUFA levels in STGD3 and age-related macular degeneration may be a contributing factor to their retinal pathology.