In type II diabetes (T2DM), there is a deficit in β-cells, increased β-cell apoptosis and formation of intracellular membrane-permeant oligomers of islet amyloid polypeptide (IAPP). Human-IAPP (h-IAPP) is an amyloidogenic protein co-expressed with insulin by β-cells. IAPP expression is increased with obesity, the major risk factor for T2DM. In this study we report that increased expression of human-IAPP led to impaired autophagy, due at least in part to the disruption of lysosome-dependant degradation. This action of IAPP to alter lysosomal clearance in vivo depends on its propensity to form toxic oligomers and is independent of the confounding effect of hyperglycemia. We report that the scaffold protein p62 that delivers polyubiquitinated proteins to autophagy may have a protective role against human-IAPP-induced apoptosis, apparently by sequestrating protein targets for degradation. Finally, we found that inhibition of lysosomal degradation increases vulnerability of β-cells to h-IAPP-induced toxicity and, conversely, stimulation of autophagy protects β-cells from h-IAPP-induced apoptosis. Collectively, these data imply an important role for the p62/autophagy/lysosomal degradation system in protection against toxic oligomer-induced apoptosis.