Minimal-change disease (MCD) is the most common cause of nephrotic syndrome (NS) and is characterized only by minor morphological alterations in podocytes. A subtype of MCD arises from mutations in nephrin, a major component of the slit diaphragm (SD). Idiopathic MCD is a complex trait where interactions of genetic and immunological factors are implicated. However, the pathogenic mechanisms remain unclear. Here we studied the molecular basis for familial NS characterized by frequent relapses and minimal-change histology. Our previous mutational analysis revealed that the two affected children were compound heterozygotes for nephrin variants C265R and V822M (Kidney Int., 2008). When heterologously expressed, these variants exhibited normal metabolic half-life and raft binding. C265R exhibited substantial ER retention, reflecting an intracellular trafficking defect. In contrast, V822M was able to reach the plasma membrane, but was restricted in lateral diffusion as well as trafficking at the cell surface. Clustering of V822M failed to evoke a maximum tyrosine-phosphorylation and actin reorganization, suggesting the inability to assemble into functioning membrane microdomains. Our results suggest that C265R and V822M compose a dysfunctional SD complex due to their mixed defects comprising reduced cell surface targeting and ineffective assembly of signaling microdomains. The defective SD likely confers a susceptibility to immunogenic stimuli and predisposes to a relapsing phenotype.