Disrupted in Schizophrenia 1 (DISC1) is a key susceptibility gene implicated in major mental illnesses, such as schizophrenia, depression, bipolar disorder and autism, but the link between this protein and the pathology of these diseases remains unclear. Recently, DISC1 has been demonstrated to form insoluble protein aggregates in vitro and in human post-mortem brain tissue but the cellular dynamics of these DISC1 aggregates and their effects on neuronal function are unknown. Using a combination of biochemistry and live cell confocal and video microscopy, we characterize the properties of DISC1 aggregates and their effects on cellular function. We demonstrate that DISC1 protein aggregates are recruited to the aggresome and degraded there by the autophagic pathway. We show that there is a compromised exchange between DISC1 in aggresomes and the cytosolic DISC1 pool, and that the large DISC1 aggregates, which can also co-recruit endogenous soluble DISC1, exhibit altered trafficking. Moreover, we demonstrate that large DISC1 aggregates have a pathological effect in neurons by causing the disruption of intracellular transport of key organellar cargo, such as mitochondria. These data, therefore, show that DISC1 is recruited to aggresomes with negative effects on neuronal function, and suggests a novel DISC1-based mechanism for neuronal pathology.