Cellular homeostasis in neurons requires that the synthesis and anterograde axonal transport of protein and membrane be balanced by their degradation and retrograde transport. To address the nature and regulation of retrograde transport in cultured sympathetic neurons, I analyzed the behavior, composition, and ultrastructure of a class of large, phase-dense organelles whose movement has been shown to be influenced by axonal growth (Hollenbeck, P. J., and D. Bray. 1987. J. Cell Biol. 105:2827-2835). In actively elongating axons these organelles underwent both anterograde and retrograde movements, giving rise to inefficient net retrograde transport. This could be shifted to more efficient, higher volume retrograde transport by halting axonal outgrowth, or conversely shifted to less efficient retrograde transport with a larger anterograde component by increasing the intracellular cyclic AMP concentration. When neurons were loaded with Texas red- dextran by trituration, autophagy cleared the label from an even distribution throughout the neuronal cytosol to a punctate, presumably lysosomal, distribution in the cell body within 72 h. During this process, 100% of the phase-dense organelles were fluorescent, showing that they contained material sequestered from the cytosol and indicating that they conveyed this material to the cell body. When 29 examples of this class of organelle were identified by light microscopy and then relocated using correlative electron microscopy, they had a relatively constant ultrastructure consisting of a bilamellar or multilamellar boundary membrane and cytoplasmic contents, characteristic of autophagic vacuoles. When neurons took up Lucifer yellow, FITC-dextran, or Texas red-ovalbumin from the medium via endocytosis at the growth cone, 100% of the phase-dense organelles became fluorescent, demonstrating that they also contain products of endocytosis. Furthermore, pulse-chase experiments with fluorescent endocytic tracers confirmed that these organelles are formed in the most distal region of the axon and undergo net retrograde transport. Quantitative ratiometric imaging with endocytosed 8-hydroxypyrene-1,3,6- trisulfonic acid showed that the mean pH of their lumena was 7.05. These results indicate that the endocytic and autophagic pathways merge in the distal axon, resulting in a class of predegradative organelles that undergo regulated transport back to the cell body.