Writing in Nature Medicine, Californian researchers found that the extra copy of chromosome 21 in people with the condition triggered the protein loss.
Their study found restoring the protein in Down's syndrome mice improved cognitive function and behaviour.
The Down's Syndrome Association said the study was interesting but the causes of Down's were very complex.
Prof Huaxi Xu, senior author of the study from the Sanford-Burnham Medical Research Institute, said that in experiments on mice they discovered that the SNX27 protein was important for brain function and memory formation.
Mice with less SNX27 had fewer active glutamate receptors and therefore had impaired learning and memory.
The SNX27-deficient mice shared some characteristics with Down's syndrome, so the researchers looked at human brains with the condition.
This confirmed their findings in the lab - that people with Down's syndrome also have significantly lower levels of SNX27.
"So, in Down's syndrome, we believe lack of SNX27 is at least partly to blame for developmental and cognitive defects," Prof Xu said.
In the lab, the research team increased the levels of the protein in mice brains to see if the problem could be resolved.
"Everything goes back to normal after SNX27 treatment," said Xin Wang, a graduate member of the research team.
"First we see the glutamate receptors come back, then memory deficit is repaired in our Down's syndrome mice."
But Prof Xu cautioned that science still had work to do to develop a safe technique of delivering genes into the human brain.