Age-related macular degeneration (AMD), the leading cause of geriatric blindness, is a multi-factorial disease with retinal-pigmented epithelial (RPE) cell dysfunction as a central pathogenic driver. With RPE degeneration, lysosomal function is a core process that is disrupted. Transcription factors EB/E3 (TFEB/E3) tightly control lysosomal function; their disruption can cause aging disorders, such as AMD. Here, we show that induced pluripotent stem cells (iPSC)-derived RPE cells with the complement factor H variant [ CFH (Y402H)] have increased AKT2, which impairs TFEB/TFE3 nuclear translocation and lysosomal function. Increased AKT2 can inhibit PGC1α, which downregulates SIRT5, an AKT2 binding partner. SIRT5 and AKT2 co-regulate each other, thereby modulating TFEB-dependent lysosomal function in the RPE. Failure of the AKT2/SIRT5/TFEB pathway in the RPE induced abnormalities in the autophagy-lysosome cellular axis by upregulating secretory autophagy, thereby releasing a plethora of factors that likely contribute to drusen formation, a hallmark of AMD. Finally, overexpressing AKT2 in RPE cells in mice led to an AMD-like phenotype. Thus, targeting the AKT2/SIRT5/TFEB pathway could be a potential therapy for atrophic AMD.