Skeletal muscle is heavily reliant upon the cytoprotective functions of autophagy and its inhibition causes disease in mice and humans. During autophagy lysosomes are heavily consumed, via their fusion with autophagosomes, before being replenished to steady state levels. In vitro cellular studies have shown that if lysosomes are depleted, autophagy becomes progressively suppressed. Two alternate pathways regulate lysosome repopulation during autophagy; TFEB/TFE3-dependent lysosome biogenesis and autophagic lysosome reformation (ALR). The microphthalmia-associated transcription factors (MiTF) TFEB/TFE3 are master regulators of the lysosomal system, controlling the expression of nearly all genes required for de novo lysosome formation. ALR recycles existing autophagic membranes to reform lysosomes. In skeletal muscle basal autophagy is high, and is further increased as an adaptive response to exercise or fasting. As such, we predicted that muscle would have a high demand for lysosome generation to maintain continued autophagic flux. Here we report for the first time that defective lysosome homeostasis in muscle causes marked inhibition of the autophagy pathway and severe muscle disease. We define a novel mechanism for regulating lysosome production during autophagy through the spatiotemporal regulation of key phosphoinositides. Our study further identifies how lysosomes are maintained in muscle in vivo and how failure of this process causes disease. This represents a new disease pathway in muscle which we predict will have broader implications for other disorders where autophagy is important including neurodegenerative conditions.