Autophagy, the major lysosomal pathway for degrading damaged or obsolete constituents, protects neurons by eliminating toxic organelles and peptides, restoring nutrient and energy homeostasis, and inhibiting apoptosis. These functions are especially vital in neurons, which are postmitotic and must survive for many decades while confronting mounting challenges of cell aging. Autophagy failure, especially related to the declining lysosomal (“phagy”) functions, heightens the neuron’s vulnerability to genetic and environmental factors underlying Alzheimer’s disease (AD) and other late-age onset neurodegenerative diseases. Components of the global autophagy–lysosomal pathway and the closely integrated endolysosomal system are increasingly implicated as primary targets of these disorders. In AD, an imbalance between heightened autophagy induction and diminished lysosomal function in highly vulnerable pyramidal neuron populations yields an intracellular lysosomal build-up of undegraded substrates, including APP-βCTF, an inhibitor of lysosomal acidification, and membrane-damaging Aβ peptide. In the most compromised of these neurons, β-amyloid accumulates intraneuronally in plaque-like aggregates that become extracellular senile plaques when these neurons die, reflecting an “inside-out” origin of amyloid plaques seen in human AD brain and in mouse models of AD pathology. In this review, the author describes the importance of lysosomal-dependent neuronal cell death in AD associated with uniquely extreme autophagy pathology (PANTHOS) which is described as triggered by lysosomal membrane permeability during the earliest “intraneuronal” stage of AD. Effectors of other cell death cascades, notably calcium-activated calpains and protein kinases, contribute to lysosomal injury that induces leakage of cathepsins and activation of additional death cascades. Subsequent events in AD, such as microglial invasion and neuroinflammation, induce further cytotoxicity. In major neurodegenerative disease models, neuronal death and ensuing neuropathologies are substantially remediable by reversing underlying primary lysosomal deficits, thus implicating lysosomal failure and autophagy dysfunction as primary triggers of lysosomal-dependent cell death and AD pathogenesis and as promising therapeutic targets.