Autophagy is the process by which cytosolic components and organelles are delivered to the lysosome for degradation. Autophagy plays important roles in cellular homeostasis and disease pathogenesis. Small chemical molecules that can modulate autophagy activity may have pharmacological value for treating diseases. Using a GFP-LC3-based high content screening assay we identified a novel chemical that is able to modulate autophagy at both initiation and degradation levels. This molecule, termed as Autophagy Modulator with Dual Effect-1 (AMDE-1), triggered autophagy in an Atg5-dependent manner, recruiting Atg16 to the pre-autophagosomal site and causing LC3 lipidation. AMDE-1 induced autophagy through the activation of AMPK, which inactivated mTORC1 and activated ULK1. AMDE-1did not affect MAP kinase, JNK or oxidative stress signaling for autophagy induction. Surprisingly, treatment with AMDE-1 resulted in impairment in autophagic flux and inhibition of long-lived protein degradation. This inhibition was correlated with a reduction in lysosomal degradation capacity but not with autophagosome-lysosome fusion. Further analysis indicated that AMDE-1 caused a reduction in lysosome acidity and lysosomal proteolytic activity, suggesting that it suppressed general lysosome function. AMDE-1 thus also impaired endocytosis-mediated EGF receptor degradation. The dual effects of AMDE-1 on autophagy induction and lysosomal degradation suggested that its net effect would likely lead to autophagic stress and lysosome dysfunction, and therefore cell death. Indeed, AMDE-1 triggered necroptosis and was preferentially cytotoxic to cancer cells. In conclusion, this study identified a new class of autophagy modulators with dual effects, which can be explored for potential uses in cancer therapy.