The endosomal-lysosomal system is made up of a set of intracellular membranous compartments that dynamically interconvert, which is comprised of early endosomes, recycling endosomes, late endosomes, and the lysosome. In addition, autophagosomes execute autophagy, which delivers intracellular contents to the lysosome. Maturation of endosomes and/or autophagosomes into a lysosome creates an unique acidic environment within the cell for proteolysis and recycling of unneeded cellular components into usable amino acids and other biomolecular building blocks. In the endocytic pathway, gradual maturation of endosomes into a lysosome and acidification of the late endosome are accompanied by vesicle trafficking, protein sorting and targeted degradation of some sorted cargo. Two opposing sorting systems are operating in these processes: the endosomal sorting complex required for transport (ESCRT) supports targeted degradation and the retromer supports retrograde retrieval of certain cargo. The endosomal-lysosomal system is emerging as a central player in a host of neurodegenerative diseases, demonstrating potential roles which are likely to be revealed in pathogenesis and for viable therapeutic strategies. Here we focus on the physiological process of endosomal-lysosomal maturation, acidification and sorting systems along the endocytic pathway, and further discuss relationships between abnormalities in the endosomal-lysosomal system and neurodegenerative diseases, especially Alzheimer’s disease (AD).