Lysosome dysfunction arises early and propels Alzheimer's disease (AD). Herein, we show that amyloid precursor protein (APP), linked to early-onset AD in Down syndrome (DS), acts directly via its β-C-terminal fragment (βCTF) to disrupt lysosomal vacuolar (H+)-adenosine triphosphatase (v-ATPase) and acidification. In human DS fibroblasts, the phosphorylated 682YENPTY internalization motif of APP-βCTF binds selectively within a pocket of the v-ATPase V0a1 subunit cytoplasmic domain and competitively inhibits association of the V1 subcomplex of v-ATPase, thereby reducing its activity. Lowering APP-βCTF Tyr682 phosphorylation restores v-ATPase and lysosome function in DS fibroblasts and in vivo in brains of DS model mice. Notably, lowering APP-βCTF Tyr682 phosphorylation below normal constitutive levels boosts v-ATPase assembly and activity, suggesting that v-ATPase may also be modulated tonically by phospho-APP-βCTF. Elevated APP-βCTF Tyr682 phosphorylation in two mouse AD models similarly disrupts v-ATPase function. These findings offer previously unknown insight into the pathogenic mechanism underlying faulty lysosomes in all forms of AD.