In people over 50, age-related macular degeneration (ARMD) has become the most common cause for severe visual loss and legal blindness in all industrialized nations. Currently, there is no effective treatment for the majority of patients. To develop new and effective modes of therapy, understanding of the molecular basis of the disease in mandatory. However, the pathogenesis of ARMD is still poorly understood. Several lines of evidence suggest that aging changes of the retinal pigment epithelium (RPE), in particular the accumulation of autofluorescent lipofuscin granules in the lysosomal compartment of postmitotic RPE cells, play a key role in the pathogenesis of the disease. Recent studies indicate that lipidic compounds of lipofuscin, represented by the retinoid A2-E, and protein damage by lipid peroxidation products, in particular malondialdehyde and 4-hydroxynonenal, induce lysosomal dysfunction and lipofuscinogenesis in the RPE. The possible mechanisms underlying this lysosomal dysfunction and the resulting adverse effects on overall RPE function are discussed.