Lysosomal membrane permeabilization or lysosomal rupture is recognized as a common and severe stress condition relevant for infection, cellular degeneration and cancer. However, the cellular response mechanisms that protect cells from the consequences of lysosomal damage and ensure lysosomal quality control and homeostasis have only recently been explored. Key elements of this response involve the specific sensing of the damage followed by extensive modification of the organelles with ubiquitin to mark them for clearance by selective macroautophagy, termed lysophagy. Efficient lysophagy is ensured by additional layers of regulation, including modulation by the ubiquitin-directed AAA-ATPase VCP/p97. Lysophagy shares many features with mitophagy, the macroautophagic removal of damaged mitochondria. This review aims to gather available data from different fields and to define the key steps necessary for sensing and subsequent clearance of damaged lysosomes. We conclude with a discussion of disease implications with a focus on neurodegeneration.