Macroautophagy/autophagy, a defense mechanism against aberrant stresses, in neurons counteracts aggregate-prone misfolded protein toxicity. Autophagy induction might be beneficial in neurodegenerative diseases (NDs). The natural compound trehalose promotes autophagy via TFEB (transcription factor EB), ameliorating disease phenotype in multiple ND models, but its mechanism is still obscure. We demonstrated that trehalose regulates autophagy by inducing rapid and transient lysosomal enlargement and membrane permeabilization (LMP). This effect correlated with the calcium-dependent phosphatase PPP3/calcineurin activation, TFEB dephosphorylation and nuclear translocation. Trehalose upregulated genes for the TFEB target and regulator Ppargc1a, lysosomal hydrolases and membrane proteins (Ctsb, Gla, Lamp2a, Mcoln1, Tpp1) and several autophagy-related components (Becn1, Atg10, Atg12, Sqstm1/p62, Map1lc3b, Hspb8 and Bag3) mostly in a PPP3- and TFEB-dependent manner. TFEB silencing counteracted the trehalose prodegradative activity on misfolded protein causative of motoneuron diseases. Similar effects were exerted by trehalase-resistant trehalose analogs, melibiose and lactulose. Thus, limited lysosomal damage might induce autophagy, perhaps as a compensatory mechanism, a process that is beneficial to counteract neurodegeneration.