Abnormal regulation of autophagy has been implicated in the pathogenesis of SLE and other autoimmune diseases. However, the underlying cause of this dysregulation remains poorly understood. This study aims to explore the role of autophagy in a murine lupus model. In our previous research, we found that C57BL/6 (B6) mice treated with pristane develop endoplasmic reticulum (ER) stress in lung microvascular endothelial cells, resulting in cell death and severe diffuse alveolar hemorrhage (DAH), a condition indistinguishable from DAH observed in SLE patients. Alongside endothelial dysfunction, monocyte-derived macrophages (Mϕ) play a crucial role in the onset of DAH. This investigation focuses on understanding the interaction between pristane and myeloid cells in the lung and peritoneum. Upon pristane treatment, we observed significantly enlarged Mϕ in the lung and peritoneum, characterized by the presence of numerous cytoplasmic vacuoles (‘foam cells’). Flow cytometry using Nile red and BODIPY493/503 staining indicated substantial amounts of neutral lipid in circulating monocytes and peritoneal Mϕ from pristane-treated mice, along with increased Cyto-ID green staining, suggesting augmented autophagy. Interestingly, when pristane-treated mice were administered an autophagy inducer (rapamycin), the severity of DAH increased, whereas treatment with an autophagy inhibitor (3-methyladenine) significantly reduced DAH. Considering the close relationship between autophagy and lysosome homeostasis, we investigated the effect of pristane on lysosomes. Staining with LAMP-1 and LysoTracker green revealed a marked increase in lysosome size in pristane-treated peritoneal Mϕ, while LysoSensor green staining (lysosomal pH) remained unchanged. Furthermore, the expression of lysosomal cathepsins S and D significantly increased, while lysosomal acid lipase (LAL) activity decreased. Cellular overload of neutral lipid leads to selective autophagy of lipid droplets (‘lipophagy’), which are subsequently transported to the lysosomes. If the capacity of LAL to break down neutral lipid into free cholesterol and fatty acids is overwhelmed, the lysosomes enlarge and become more permeable, releasing cathepsins into the cytoplasm and promoting cell death. Increasing the cholesterol content of lysosomal membranes can protect against lysosome-dependent cell death. Treatment with U18666A, a blocker of the Niemann-Pick C disease protein NPC1, prevents the export of free cholesterol from the lysosomes and stabilizes the lysosomal membrane. When administered to pristane-treated mice, U18666A normalized lysosomal cathepsin expression, restored lysosome size to normal, abolished ER stress in the lungs, and prevented the induction of DAH. In conclusion, pristane treatment disrupts lipid homeostasis, leading to lipophagy, lysosomal dysfunction, and ER stress, resulting in the development of DAH. NPC1 inhibition reverses these abnormalities and prevents DAH. Our findings shed light on the potential role of lysosomal dysfunction in SLE patients and provide insights into the mechanism of action of antimalarials, which interfere with lysosomal activity and autophagy.