ClC-3 is a voltage-gated Cl−channel that is highly conserved and widely expressed, although its function, localization, and properties remain a matter of considerable debate. In this study, we have shown that heterologous expression of ClC-3 in either Chinese hamster ovary (CHO-K1) or human hepatoma (Huh-7) cells results in the formation of large, acidic vesicular structures within cells. Vesicle formation is prevented by bafilomycin, an inhibitor of the vacuolar ATPase, and is not induced by an E224A mutant of ClC-3 with altered channel activity. This demonstrates that vesicle formation requires both proton pumping and Cl−channel activity. Manipulation of the intracellular Cl−concentration demonstrated that the ClC-3-associated vesicles shrink and swell consistent with a highly Cl−-permeable membrane. The ClC-3 vesicles were identified as lysosomes based on their colocalization with the lysosome-associated proteins lamp-1, lamp-2, and cathepsin D and on their failure to colocalize with fluorescently labeled endosomes. We conclude that ClC-3 is an intracellular channel that conducts Cl− when it is present in intracellular vesicles. Its overexpression results in its appearance in enlarged lysosome-like structures where it contributes to acidification by charge neutralization.