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The endolysosomal system not only is an integral part of the cellular catabolic machinery that processes and recycles nutrients for synthesis of biomaterials, but also acts as signaling hub to sense and coordinate the energy state of cells with growth and differentiation. Lysosomal dysfunction adversely influences vesicular transport-dependent macromolecular degradation and thus causes serious problems for human health. In mammalian cells, loss of the lysosome associated membrane proteins LAMP1 and LAMP2 strongly affects autophagy and cholesterol trafficking. Here we show that the previously uncharacterized Drosophila Lamp1 is a bona fide ortholog of vertebrate LAMP1 and LAMP2. Surprisingly and in contrast to lamp1 lamp2 double-mutant mice, Drosophila Lamp1 is not required for viability or autophagy, suggesting that fly and vertebrate LAMP proteins acquired distinct functions, or that autophagy defects in lamp1 lamp2 mutants may have indirect causes. However, Lamp1 deficiency results in an increase in the number of acidic organelles in flies. Furthermore, we find that Lamp1 mutant larvae have defects in lipid metabolism as they show elevated levels of sterols and diacylglycerols (DAGs). Because DAGs are the main lipid species used for transport through the hemolymph (blood) in insects, our results indicate broader functions of Lamp1 in lipid transport. Our findings make Drosophila an ideal model to study the role of LAMP proteins in lipid assimilation without the confounding effects of their storage and without interfering with autophagic processes.