The V-ATPase is a proton pump consisting of a membrane-integral V0 sector and a peripheral V1 sector, which carries the ATPase activity. In vitro studies of yeast vacuole fusion and evidence from worms, flies, zebrafish and mice suggested that V0 interacts with the SNARE machinery for membrane fusion, that it promotes the induction of hemifusion and that this activity requires physical presence of V0 rather than its proton pump activity. A recent in vivo study in yeast has challenged these interpretations, concluding that fusion required solely lumenal acidification but not the V0 sector itself. Here, we identify the reasons for this discrepancy and reconcile it. We find that acute pharmacological or physiological inhibition of V-ATPase pump activity de-acidifies the vacuole lumen in living yeast cells within minutes. Time-lapse microscopy revealed that de-acidification induces vacuole fusion rather than inhibiting it. Cells expressing mutated V0 subunits that maintain vacuolar acidity were blocked in this fusion. Thus, proton pump activity of the V-ATPase negatively regulates vacuole fusion in vivo. Vacuole fusion in vivo does, however, require physical presence of a fusion-competent V0 sector.