Accumulation of depolarized mitochondria within β‐cells has been associated with oxidative damage and development of diabetes. To determine the source and fate of depolarized mitochondria, individual mitochondria were photolabeled and tracked through fusion and fission. Mitochondria were found to go through frequent cycles of fusion and fission in a ‘kiss and run’ pattern. Fission events often generated uneven daughter units: one daughter exhibited increased membrane potential (Δψ_m) and a high probability of subsequent fusion, while the other had decreased membrane potential and a reduced probability for a fusion event. Together, this pattern generated a subpopulation of non‐fusing mitochondria that were found to have reduced Δψ_m and decreased levels of the fusion protein OPA1. Inhibition of the fission machinery through DRP1^K38A or FIS1 RNAi decreased mitochondrial autophagy and resulted in the accumulation of oxidized mitochondrial proteins, reduced respiration and impaired insulin secretion. Pulse chase and arrest of autophagy at the pre‐proteolysis stage reveal that before autophagy mitochondria lose Δψ_m and OPA1, and that overexpression of OPA1 decreases mitochondrial autophagy. Together, these findings suggest that fission followed by selective fusion segregates dysfunctional mitochondria and permits their removal by autophagy.