Mutations in DNAJC5/CSPα are associated with adult neuronal ceroid lipofuscinosis (ANCL), a dominant-inherited neurodegenerative disease featuring lysosome-derived autofluorescent storage materials (AFSMs) termed lipofuscin. Functionally, DNAJC5 has been implicated in chaperoning synaptic proteins and in misfolding-associated protein secretion (MAPS), but how DNAJC5 dysfunction causes lipofuscinosis and neurodegeneration is unclear. Here we report two functionally distinct but coupled chaperoning activities of DNAJC5, which jointly regulate lysosomal homeostasis: While endolysosome-associated DNAJC5 promotes ESCRT-dependent microautophagy, a fraction of perinuclear and non-lysosomal DNAJC5 mediates MAPS. Functional proteomics identifies a previously unknown DNAJC5 interactor SLC3A2/CD98hc that is essential for the perinuclear DNAJC5 localization and MAPS but dispensable for microautophagy. Importantly, uncoupling these two processes, as seen in cells lacking SLC3A2 or expressing ANCL-associated DNAJC5 mutants, generates DNAJC5-containing AFSMs resembling NCL patient-derived lipofuscin and induces neurodegeneration in a Drosophila ANCL model. These findings suggest that MAPS safeguards microautophagy to avoid DNAJC5-associated lipofuscinosis and neurodegeneration. Abbreviations: 3-MA: 3-methyladenine; ACTB: actin beta; AFSM: autofluorescent storage materials; ANCL: adult neuronal ceroid lipofuscinosis; Baf. A1: bafilomycin A1; CLN: ceroid lipofuscinosis neuronal; CLU: clusterin; CS: cysteine string domain of DNAJC5/CSPα; CUPS: compartment for unconventional protein secretion; DN: dominant negative; DNAJC5/CSPα: DnaJ heat shock protein family (Hsp40) member C5; eMI: endosomal microautophagy; ESCRT: endosomal sorting complex required for transport; GFP: green fluorescent protein; HSPA8/HSC70: heat shock protein family A (Hsp70) member 8; INCL: infant neuronal ceroid lipofuscinosis; JNCL: juvenile neuronal ceroid lipofuscinosis; KO: knockout; LAMP1: lysosomal associated membrane protein 1; LAPTM4B: lysosomal protein transmembrane 4 beta; LN: linker domain of DNAJC5/CSPα; MAPS: misfolding-associated protein secretion; mCh/Ch: mCherry; mCi/Ci: mCitrine; MTOR: mechanistic target of rapamycin kinase; NCL: neuronal ceroid lipofuscinosis; PPT1: palmitoyl-protein thioesterase 1; PQC: protein quality control; SBP: streptavidin binding protein; SGT: small glutamine-rich tetratricopeptide repeat; shRNA: short hairpin RNA; SLC3A2/CD98hc: solute carrier family 3 member 2; SNCA/α-synuclein: synuclein alpha; TMED10: transmembrane p24 trafficking protein 10; UV: ultraviolet; VPS4: vacuolar protein sorting 4 homolog; WT: wild type.