Lewy bodies (LBs), α-synuclein-enriched intracellular inclusions, are a hallmark of Parkinson's disease (PD) pathology, yet a cellular model for LB formation remains elusive. Recent evidence indicates that immune dysfunction may contribute to the development of PD. In this study, we found that induced pluripotent stem cell (iPSC)-derived human dopaminergic (DA) neurons form LB-like inclusions after treatment with α-synuclein preformed fibrils (PFFs) but only when coupled to a model of immune challenge (interferon-γ or interleukin-1β treatment) or when co-cultured with activated microglia-like cells. Exposure to interferon-γ impairs lysosome function in DA neurons, contributing to LB formation. The knockdown of LAMP2 or the knockout of GBA in conjunction with PFF administration is sufficient for inclusion formation. Finally, we observed that the LB-like inclusions in iPSC-derived DA neurons are membrane bound, suggesting that they are not limited to the cytoplasmic compartment but may be formed due to dysfunctions in autophagy. Together, these data indicate that immune-triggered lysosomal dysfunction may contribute to the development of PD pathology.