Autophagy is a conserved membrane trafficking pathway that mediates the delivery of cytoplasmic substrates to the lysosome for degradation. Impaired autophagic function is implicated in the pathology of various neurodegenerative diseases. We have generated transgenic C. elegans that express human beta-amyloid peptide (Abeta) in order to examine the mechanism(s) of Abeta-toxicity. In this model, Abeta expression causes autophagosome accumulation, thereby mimicking a pathology found in brains of Alzheimer's disease patients. Furthermore, we demonstrate that decreased insulin-receptor signaling [using the daf-2(e1370) mutation] suppresses Abeta-induced paralysis by a mechanism that requires autophagy. Surprisingly, the daf-2 mutation also decreases Abeta-induced autophagosome accumulation. These observations can be explained by a model in which decreased insulin-receptor signaling promotes the maturation of autophagosomes into degradative autolysosomes, whereas Abeta impairs this process. Consistent with this model, we find that RNAi-mediated knock-down of lysosomal components results in enhanced Abeta-toxicity and autophagosome accumulation. Also, Abeta; daf-2(e1370) nematodes contain more lysosomes than either Abeta or control strains. Finally, we demonstrate that decreased insulin-receptor signaling promotes the autophagic degradation of Abeta.