Chronic exposure of pancreatic β cells to high concentrations of free fatty acids leads to lipotoxicity (LT)‐mediated suppression of glucose‐stimulated insulin secretion. This effect is in part caused by a decline in mitochondrial function as well as by a reduction in lysosomal acidification. Because both mitochondria and lysosomes can alter one another's function, it remains unclear which initiating dysfunction sets off the detrimental cascade of LT, ultimately leading to β‐cell failure. Here, we investigated the effects of restoring lysosomal acidity on mitochondrial function under LT. Our results show that LT induces a dose‐dependent lysosomal alkalization accompanied by an increase in mitochondrial mass. This increase is due to a reduction in mitochondrial turnover as analyzed by MitoTimer, a fluorescent protein for which the emission is regulated by mitochondrial clearance rate. Mitochondrial oxygen consumption rate, citrate synthase activity, and ATP content are all reduced by LT. Restoration of lysosomal acidity using lysosome‐targeted nanoparticles is accompanied by stimulation of mitochondrial turnover as revealed by mitophagy measurements and the recovery of mitochondrial mass. Remarkably, re‐acidification restores citrate synthase activity and ATP content in an insulin secreting β‐cell line (INS‐1). Furthermore, nanoparticle‐mediated lysosomal reacidification rescues mitochondrial maximal respiratory capacity in both INS‐1 cells and primary mouse islets. Therefore, our results indicate that mitochondrial dysfunction is downstream of lysosomal alkalization under lipotoxic conditions and that recovery of lysosomal acidity is sufficient to restore the bioenergetic defects.—Assali, E. A., Shlomo, D., Zeng, J., Taddeo, E. P., Trudeau, K. M., Erion, K. A., Colby, A. H., Grinstaff, M. W., Liesa, M., Las, G., Shirihai, O. S. Nanoparticle‐mediated lysosomal reacidification restores mitochondrial turnover and function in β cells under lipotoxicity. FASEB J. 33, 4154–4165 (2019). http://www.fasebj.org