Glial engulfment of dead neurons and neurites after trauma, during development and in neurodegenerative diseases plays a crucial role in nervous system maintenance. Axon debris generated after traumatic injury is cleared by phagocytic glia via Draper receptor signalling in Drosophila. However, mechanisms governing the efficiency of axon debris phagocytosis and degradation have remained largely unexplored. Here we show that glial LC3-associated phagocytosis (LAP), an engulfment pathway assisted by certain components of the macroautophagy machinery, promotes clearance of degenerating axons in the Drosophila wing nerve. A LAP-specific subset of autophagy-related (Atg) genes is required in glia for efficient debris elimination, which includes members of the Atg8a (LC3) conjugation system and the Vps34 lipid kinase complex subunits UVRAG and Rubicon but not Atg14 or the Atg1 kinase complex. Atg8a and Rubicon are recruited to Rab7-positive phagosomes and Atg8a lipid conjugation is essential for debris-containing phagosome maturation. Finally, Rubicon overexpression in glia accelerates axon debris elimination. Our results reveal the critical role of LAP in glia in the clearance of neuronal debris in vivo, with important implications for the recovery of the injured nervous system.