Phospholipase D3 (PLD3) polymorphisms are linked to late-onset Alzheimer’s disease (LOAD). Being a lysosomal 5’-3’ exonuclease, its neuronal substrates remained unknown as well as how a defective lysosomal nucleotide catabolism connects to AD-proteinopathy. We identified mitochondrial DNA (mtDNA) as a major physiological substrate and show its manifest build-up in lysosomes of PLD3-defective cells. mtDNA accretion creates a degradative (proteolytic) bottleneck that presents at the ultrastructural level as a marked abundance of multilamellar bodies, often containing mitochondrial remnants, which correlates with increased PINK1-dependent mitophagy. Lysosomal leakage of mtDNA to the cytosol activates cGAS–STING signaling that upregulates autophagy and induces amyloid precursor C-terminal fragment (APP-CTF) and cholesterol accumulation. STING inhibition largely normalizes APP-CTF levels, whereas an APP knockout in PLD3-deficient backgrounds lowers STING activation and normalizes cholesterol biosynthesis. Collectively, we demonstrate molecular cross-talks through feedforward loops between lysosomal nucleotide turnover, cGAS-STING and APP metabolism that, when dysregulated, result in neuronal endolysosomal demise as observed in LOAD.