Defects in endolysosomal and autophagic functions are increasingly viewed as key pathological features of neurodegenerative disorders. A master regulator of these functions is phosphatidylinositol-3-phosphate (PI3P), a phospholipid synthesized primarily by class III PI 3-kinase Vps34. Here we report that disruption of neuronal Vps34 function in vitro and in vivo impairs autophagy, lysosomal degradation as well as lipid metabolism, causing endolysosomal membrane damage. PI3P deficiency also promotes secretion of unique exosomes enriched for undigested lysosomal substrates, including amyloid precursor protein C-terminal fragments (APP-CTFs), specific sphingolipids, and the phospholipid bis(monoacylglycero)phosphate (BMP), which normally resides in the internal vesicles of endolysosomes. Secretion of these exosomes requires neutral sphingomyelinase 2 and sphingolipid synthesis. Our results reveal a homeostatic response counteracting lysosomal dysfunction via secretion of atypical exosomes eliminating lysosomal waste and define exosomal APP-CTFs and BMP as candidate biomarkers for endolysosomal dysfunction associated with neurodegenerative disorders.