Ubiquitinated inclusions are a common feature of many neurodegenerative conditions. We have proposed that, at least in part, such inclusions may be formed due to dysfunction of the proteasome. We have modeled such proteasomal dysfunction by applying pharmacological inhibitors to cultured embryonic rat cortical neurons. This treatment leads to neuronal death and formation of ubiquitin/alpha-synuclein-positive cytoplasmic inclusions. At late time points following proteasomal inhibition such inclusions are no longer discerned. Instead, many neurons accumulate small ubiquitinated aggregates, which may represent remnants of the inclusions. In this work we have examined a potential mechanism for inclusion dissolution. Electron microscopy images showed activation of macroautophagy at late time points after proteasomal inhibition. Labeling with LysoTracker Red, a dye that accumulates in acidic compartments, or immunostaining for the lysosomal enzyme Cathepsin D, showed an increase in globular staining. Cathepsin D co-localized partially with small ubiquitinated aggregates, but not inclusions. Application of an inhibitor of macroautophagy or of the vacuolar ATPase led to an increase in the number of inclusions and a decrease in small aggregates, whereas an activator of autophagy had the opposite effects. There was no significant change in apoptotic death following these manipulations. We conclude that, following proteasomal inhibition of cultured cortical neurons, there is activation of macroautophagy and of the lysosomal pathway. This activation results in dissolution of ubiquitinated inclusions into small aggregates, without directly impacting neuronal cell death. These data further support the idea that in this model inclusions and neuronal cell death are independent processes.