Autophagy is a multistep membrane traffic pathway. In contrast to autophagosome formation, the mechanisms underlying autophagosome-lysosome fusion remain largely unknown. Here, we describe a novel autophagy regulator, inositol polyphosphate-5-phosphatase E (INPP5E), involved in autophagosome-lysosome fusion process. In neuronal cells, INPP5E knockdown strongly inhibited autophagy by impairing the fusion step. A fraction of INPP5E is localized to lysosomes, and its membrane anchoring and enzymatic activity are necessary for autophagy. INPP5E decreases lysosomal phosphatidylinositol 3,5-bisphosphate (PI(3,5)P2), one of the substrates of the phosphatase, that counteracts cortactin-mediated actin filament stabilization on lysosomes. Lysosomes require actin filaments on their surface for fusing with autophagosomes. INPP5E is one of the genes responsible for Joubert syndrome, a rare brain abnormality, and mutations found in patients with this disease caused defects in autophagy. Taken together, our data reveal a novel role of phosphoinositide on lysosomes and an association between autophagy and neuronal disease.