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Abstract Identifying genetic modifiers of familial amyotrophic lateral sclerosis (ALS) may reveal targets for therapeutic modulation with potential application to sporadic ALS. GGGGCC (G4C2) repeat expansions in the C9orf72 gene underlie the most common form of familial ALS, and generate toxic arginine-containing dipeptide repeats (DPRs), which interfere with membraneless organelles, such as the nucleolus. Here we considered senataxin (SETX), the genetic cause of ALS4, as a modifier of C9orf72 ALS, because SETX is a nuclear helicase that may regulate RNA–protein interactions involved in ALS dysfunction. After documenting that decreased SETX expression enhances arginine-containing DPR toxicity and C9orf72 repeat expansion toxicity in HEK293 cells and primary neurons, we generated SETX fly lines and evaluated the effect of SETX in flies expressing either (G4C2)58 repeats or glycine-arginine-50 [GR(50)] DPRs. We observed dramatic suppression of disease phenotypes in (G4C2)58 and GR(50) Drosophila models, and detected a striking relocalization of GR(50) out of the nucleolus in flies co-expressing SETX. Next-generation GR(1000) fly models, that show age-related motor deficits in climbing and movement assays, were similarly rescued with SETX co-expression. We noted that the physical interaction between SETX and arginine-containing DPRs is partially RNA-dependent. Finally, we directly assessed the nucleolus in cells expressing GR-DPRs, confirmed reduced mobility of proteins trafficking to the nucleolus upon GR-DPR expression, and found that SETX dosage modulated nucleolus liquidity in GR-DPR-expressing cells and motor neurons. These findings reveal a hitherto unknown connection between SETX function and cellular processes contributing to neuron demise in the most common form of familial ALS.