Sphingomyelin is a dominant sphingolipid in mammalian cells. Its production in the trans-Golgi traps cholesterol synthesized in the ER to promote formation of a sphingomyelin/sterol gradient along the secretory pathway. This gradient marks a fundamental transition in physical membrane properties that help specify organelle identify and function. We previously identified mutations in sphingomyelin synthase SMS2 that cause osteoporosis and skeletal dysplasia. Here, we show that SMS2 variants linked to the most severe bone phenotypes retain full enzymatic activity but fail to leave the ER owing to a defective autonomous ER export signal. Cells harboring pathogenic SMS2 variants accumulate sphingomyelin in the ER and display a disrupted transbilayer sphingomyelin asymmetry. These aberrant sphingomyelin distributions also occur in patient-derived fibroblasts and are accompanied by imbalances in cholesterol organization, glycerophospholipid profiles, and lipid order in the secretory pathway. We postulate that pathogenic SMS2 variants undermine the capacity of osteogenic cells to uphold nonrandom lipid distributions that are critical for their bone forming activity.