We investigated the role of autophagy, a controlled cellular self-digestion process, in regulating survival of neurons exposed to atypical antipsychotic olanzapine. Olanzapine induced autophagy in human SH-SY5Y neuronal cell line, as confirmed by the increase in autophagic flux and presence of autophagic vesicles, fusion of autophagosomes with lysosomes, and increase in the expression of autophagy-related (ATG) genes ATG4B, ATG5, and ATG7. The production of reactive oxygen species, but not modulation of the main autophagy repressor MTOR or its upstream regulators AMP-activated protein kinase and AKT1, was responsible for olanzapine-triggered autophagy. Olanzapine-mediated oxidative stress also induced mitochondrial depolarization and damage, and the autophagic clearance of dysfunctional mitochondria was confirmed by electron microscopy, colocalization of autophagosome-associated MAP1LC3B (LC3B henceforth) and mitochondria, and mitochondrial association with the autophagic cargo receptor SQSTM1/p62. While olanzapine-triggered mitochondrial damage was not overtly toxic to SH-SY5Y cells, their death was readily initiated upon the inhibition of autophagy with pharmacological inhibitors, RNA interference knockdown of BECN1 and LC3B, or biological free radical nitric oxide. The treatment of mice with olanzapine for 14 d increased the brain levels of autophagosome-associated LC3B-II and mRNA encoding Atg4b, Atg5, Atg7, Atg12, Gabarap, and Becn1. The administration of the autophagy inhibitor chloroquine significantly increased the expression of proapoptotic genes (Trp53, Bax, Bak1, Pmaip1, Bcl2l11, Cdkn1a, and Cdkn1b) and DNA fragmentation in the frontal brain region of olanzapine-exposed animals. These data indicate that olanzapine-triggered autophagy protects neurons from otherwise fatal mitochondrial damage, and that inhibition of autophagy might unmask the neurotoxic action of the drug.