Mutations in the AAA+ ATPase p97 (also known as valosin containing protein, VCP) cause multisystem proteinopathy 1 (MSP-1) which includes amyotrophic-lateral sclerosis (ALS); however, the pathogenic mechanisms that contribute to motor neuron loss in familial ALS caused by p97 mutations remain obscure. Here, we use two distinct induced pluripotent stem cell models differentiated into spinal motor neurons to investigate how p97 mutations perturb the motor neuron proteome. Using multiplexed quantitative proteomics in these cells, we find that motor neurons harboring the p97 R155H mutation have deficits in lysosome quality control and the selective autophagy of lysosomes (lysophagy). p97 R155H motor neurons are unable to efficiently clear damaged lysosomes and have reduced viability. Additionally, lysosomes in mutant motor neurons have increased pH compared to their wildtype counterparts. The endo-lysosomal damage repair (ELDR) complex is required for clearance of damaged lysosomes and involves UBXD1-p97 interaction which is disrupted in mutant motor neurons. Finally, we report that inhibition of the ATPase activity of p97 R155H using the ATP competitive inhibitor CB-5083 rescues lysophagy defects in mutant motor neurons. These results add to the increasing evidence that endo-lysosomal dysfunction is a key aspect of disease pathogenesis in p97-related disorders.