Dialysis related amyloidosis is a serious complication of long-term hemodialysis in which beta(2)-microglobulin (beta(2)m) forms amyloid fibrils that deposit predominantly in cartilaginous tissues. How these fibrils form in vivo, however, is poorly understood. Here we perform a systematic investigation into the role of macrophages in the formation and degradation of beta(2)m amyloid fibrils, building on observations that macrophages are found in association with beta(2)m amyloid deposits in vivo and that these cells contain intra-lysosomal beta(2)m amyloid. In live cell imaging experiments we demonstrate that macrophages internalize monomeric beta(2)m, whereupon it is sorted to lysosomes. At lysosomal pH beta(2)m self-associates in vitro to form amyloid-like fibrils with an array of morphologies as visualized by atomic force microscopy. Cleavage of the monomeric protein by both macrophages and lysosomal proteases isolated from these cells results in the rapid degradation of the monomeric protein, preventing amyloid formation. Incubation of macrophages with preformed fibrils revealed that macrophages internalize amyloid-like fibrils formed extracellularly, but in marked contrast with the monomeric protein, the fibrils were not degraded within macrophage lysosomes. Correspondingly beta(2)m fibrils were highly resistant to degradation by high concentrations of lysosomal proteases isolated from macrophages. Despite their enormous degradative capacity, therefore, macrophage lysosomes cannot ameliorate dialysis-related amyloidosis by degrading pre-existing amyloid fibrils, but lysosomal proteases may play a protective role by eliminating amyloid precursors before beta(2)m fibrils can accumulate in what may represent an otherwise fibrillogenic environment.