X-linked myotubular myopathy (XLMTM) is a congenital disorder caused by mutations of the myotubularin gene, MTM1. Myotubularin belongs to a large family of conserved lipid phosphatases that include both catalytically active and inactive myotubularin-related proteins (i.e., “MTMRs”). Biochemically, catalytically inactive MTMRs have been shown to form heteroligomers with active members within the myotubularin family through protein-protein interactions. However, the pathophysiological significance of catalytically inactive MTMRs remains unknown in muscle. By in vitro as well as in vivo studies, we have identified that catalytically inactive myotubularin-related protein 12 (MTMR12) binds to myotubularin in skeletal muscle. Knockdown of the mtmr12 gene in zebrafish resulted in skeletal muscle defects and impaired motor function. Analysis of mtmr12 morphant fish showed pathological changes with central nucleation, disorganized Triads, myofiber hypotrophy and whorled membrane structures similar to those seen in X-linked myotubular myopathy. Biochemical studies showed that deficiency of MTMR12 results in reduced levels of myotubularin protein in zebrafish and mammalian C2C12 cells. Loss of myotubularin also resulted in reduction of MTMR12 protein in C2C12 cells, mice and humans. Moreover, XLMTM mutations within the myotubularin interaction domain disrupted binding to MTMR12 in cell culture. Analysis of human XLMTM patient myotubes showed that mutations that disrupt the interaction between myotubularin and MTMR12 proteins result in reduction of both myotubularin and MTMR12. These studies strongly support the concept that interactions between myotubularin and MTMR12 are required for the stability of their functional protein complex in normal skeletal muscles. This work highlights an important physiological function of catalytically inactive phosphatases in the pathophysiology of myotubular myopathy and suggests a novel therapeutic approach through identification of drugs that could stabilize the myotubularin-MTMR12 complex and hence ameliorate this disorder.