MYO1C, a single-headed class I myosin, associates with cholesterol-enriched lipid rafts and facilitates their recycling from intracellular compartments to the cell surface. Absence of functional MYO1C disturbs the cellular distribution of lipid rafts, causes the accumulation of cholesterol-enriched membranes in the perinuclear recycling compartment, and leads to enlargement of endolysosomal membranes. Several feeder pathways, including classical endocytosis but also the autophagy pathway, maintain the health of the cell by selective degradation of cargo through fusion with the lysosome. Here we show that loss of functional MYO1C leads to an increase in total cellular cholesterol and its disrupted subcellular distribution. We observe an accumulation of autophagic structures caused by a block in fusion with the lysosome and a defect in autophagic cargo degradation. Interestingly, the loss of MYO1C has no effect on degradation of endocytic cargo such as EGFR, illustrating that although the endolysosomal compartment is enlarged in size, it is functional, contains active hydrolases, and the correct pH. Our results highlight the importance of correct lipid composition in autophagosomes and lysosomes to enable them to fuse. Ablating MYO1C function causes abnormal cholesterol distribution, which has a major selective impact on the autophagy pathway.