The proteasome is important for degradation of worn out and misfolded proteins. Decreased proteasome activity has been implicated in Alzheimer's disease (AD). Proteasome inhibition induces autophagy, but it is still unknown whether autophagy is beneficial or deleterious to AD neurons, as the autophagosome has been suggested as a site of amyloid-β (Aβ) generation. In this study, we investigated the effect of proteasome inhibition on Aβ accumulation and secretion, as well as the processing of amyloid-β protein precursor (AβPP) in AβPP(Swe) transfected SH-SY5Y neuroblastoma cells. We show that proteasome inhibition resulted in autophagy-dependent accumulation of Aβ in lysosomes, and increased levels of intracellular and secreted Aβ. The enhanced levels of Aβ could not be explained by increased amounts of AβPP. Instead, reduced degradation of the C-terminal fragment of AβPP (C99) by the proteasome makes C99 available for γ-secretase cleavage, leading to Aβ generation. Inhibition of autophagy after proteasome inhibition led to reduced levels of intracellular, but not secreted Aβ, and tended to further increase the C99 to AβPP ratio, supporting involvement of the autophagosome in Aβ generation. Furthermore, proteasome inhibition caused a reduction in cellular viability, which was reverted by inhibition of autophagy. Dysfunction of the proteasome could cause lysosomal accumulation of Aβ, as well as increased generation and secretion of Aβ, which is partly facilitated by autophagy. As a decrease in cellular viability was also detected, it is possible that upregulation of autophagy is an unsuccessful rescue mechanism, which instead of being protective, contributes to AD pathogenesis.