Aging is the most prominent risk factor for Alzheimer's disease (AD). However, the cellular mechanisms linking neuronal proteostasis decline to the characteristic aberrant protein deposits in AD brains remain elusive. Here, we develop transdifferentiated neurons (tNeurons) from 5 human dermal fibroblasts as a neuronal model that retains aging hallmarks and exhibits ADlinked vulnerabilities. Remarkably, AD tNeurons accumulate proteotoxic deposits, including phospho-Tau and Aβ, resembling those in AD patient and APP mouse brains. Quantitative tNeuron proteomics identify aging and AD-linked deficits in proteostasis and organelle homeostasis, most notably in endosome-lysosomal components. Lysosomal deficits in aged 10 tNeurons, including constitutive lysosomal damage and ESCRT-mediated lysosomal repair defects, are exacerbated in AD tNeurons and linked to inflammatory cytokine secretion and cell death. Supporting lysosomal deficits' centrality in AD, compounds ameliorating lysosomal function reduce Aβ deposits and cytokine secretion. Thus, the tNeuron model system reveals impaired lysosomal homeostasis as an early event of aging and AD.