Presenilin 1 (PS1) interacts with telencephalin (TLN) and the amyloid precursor protein via their transmembrane domain (Annaert, W.G., C. Esselens, V. Baert, C. Boeve, G. Snellings, P. Cupers, K. Craessaerts, and B. De Strooper. 2001. Neuron. 32:579–589). Here, we demonstrate that TLN is not a substrate for γ-secretase cleavage, but displays a prolonged half-life in PS1−/− hippocampal neurons. TLN accumulates in intracellular structures bearing characteristics of autophagic vacuoles including the presence of Apg12p and LC3. Importantly, the TLN accumulations are suppressed by adenoviral expression of wild-type, FAD-linked and D257A mutant PS1, indicating that this phenotype is independent from γ-secretase activity. Cathepsin D deficiency also results in the localization of TLN to autophagic vacuoles. TLN mediates the uptake of microbeads concomitant with actin and PIP2 recruitment, indicating a phagocytic origin of TLN accumulations. Absence of endosomal/lysosomal proteins suggests that the TLN-positive vacuoles fail to fuse with endosomes/lysosomes, preventing their acidification and further degradation. Collectively, PS1 deficiency affects in a γ-secretase–independent fashion the turnover of TLN through autophagic vacuoles, most likely by an impaired capability to fuse with lysosomes.