Lysosomes are the recycling center and nutrient signaling hub of the cell. Here, we show that lysosomes also control mesenchymal stem cell (MSC) differentiation by proteomic reprogramming. The chaperone-mediated autophagy (CMA) lysosome subgroup promotes osteogenesis, while suppressing adipogenesis, by selectively removing osteogenesis-deterring factors, especially master transcriptional factors, such as adipogenic TLE3, ZNF423, and chondrogenic SOX9. The activity of the CMA-committed lysosomes in MSCs are controlled by Van-Gogh-like 2 (Vangl2) at lysosomes. Vangl2 directly binds to lysosome-associated membrane protein 2A (LAMP-2A) and targets it for degradation. MSC-specific Vangl2 ablation in mice increases LAMP-2A expression and CMA-lysosome numbers, promoting bone formation while reducing marrow fat. The Vangl2:LAMP-2A ratio in MSCs correlates inversely with the capacity of the cells for osteoblastic differentiation in humans and mice. These findings demonstrate a critical role for lysosomes in MSC lineage acquisition and establish Vangl2-LAMP-2A signaling as a critical control mechanism.