To investigate the effect of the lipofuscin component N-retinylidene-N-retinylethanolamine (A2-E) on degradative functions of lysosomes in human retinal pigment epithelial (RPE) cells and to evaluate its mechanism of action. A2-E was coupled to low-density lipoprotein (LDL). Human RPE cell cultures were loaded with the A2-E/LDL complex, and controls were run with medium containing LDL alone. To determine whether A2-E accumulated in lysosomes, cells were fractionated in a Percoll gradient, and protein degradation was determined by metabolic labeling and measurement of the release of low-molecular-weight radioactivity. Lysosomal degradation was distinguished from nonlysosomal degradation by inclusion of NH4Cl in the medium. The metabolism of sulfated glycosaminoglycans was studied by radiosulfate incorporation in pulse-chase experiments. Intralysosomal pH was determined using a fluorescent lysosomotropic pH indicator. A2-E accumulated almost exclusively in the lysosomal compartment. Lysosomal protein degradation was reduced in a dose-dependent fashion in A2-E-treated cells. The selectivity of A2-E on lysosomal function was demonstrated by its lack of effect on degradation of extralysosomal protein. Lysosomal glycosaminoglycan catabolism of RPE cells was also strongly inhibited by A2-E. Lysosomal pH was increased by A2-E. The findings indicate that accumulation of A2-E in RPE cells interferes with lysosomal functions as exemplified by its inhibitory effect on protein and glycosaminoglycan catabolic pathways. The quaternary amine character of the A2-E apparently causes a perturbation of the acidic intralysosomal milieu, resulting in diminished hydrolase action and consequent accumulation of undegraded material. Such mechanism could be operative in retinal diseases associated with excessive lipofuscin accumulation including age-related macular degeneration.