Inherited retinal dystrophies (IRDs) are characterized by their high clinical and genetic heterogeneity. Despite significant advances in the identification of genes associated with IRDs, many individuals and families still have not received a definite molecular diagnosis. Here, we performed clinical examinations and conducted genetic testing in five families with IRD. Whole exome sequencing in the five index cases revealed a heterozygous missense variant, c.209G > A, p.(Gly70Glu) in the ARL3 gene (NM_004311.4). A de novo occurrence was demonstrated in one affected individual and autosomal dominant inheritance in nine affected individuals from four families. Their phenotypes displayed variable expressivity, and ranged from rod-cone to cone-rod dystrophy with photophobia. Human induced pluripotent stem cells (hiPSCs) were generated from dermal fibroblasts from the individual with the de novo ARL3 variant and were differentiated to retinal pigment epithelium cells (RPE) and retinal organoids. Immunofluorescence analyses in these models showed decreased INPP5E localization within the cilia of RPE and connecting cilia of retinal organoids, as well as reduced PDE6⍺ in the organoid outer segments, suggesting that the p.(Gly70Glu) variant causes IRD by defective lipidated protein transport in photoreceptors and/or RPE. This is the first study of ARL3 dysfunction in human retinal cells, highlighting its importance for retinal homeostasis, as well as a variability in the clinical presentation of ARL3-associated IRD.