Lipid droplet (LD) catabolism in hepatocytes is mediated by a combination of lipolysis and a selective autophagic mechanism called lipophagy, but the relative contributions of these seemingly distinct pathways remain unclear. We find that inhibition of lipolysis, lipophagy, or both resulted in similar overall LD content but dramatic differences in LD morphology. Inhibition of the lipolysis enzyme adipose triglyceride lipase (ATGL) resulted in large cytoplasmic LDs, whereas lysosomal inhibition caused the accumulation of numerous small LDs within the cytoplasm and degradative acidic vesicles. Combined inhibition of ATGL and LAL resulted in large LDs, suggesting that lipolysis targets these LDs upstream of lipophagy. Consistent with this, ATGL was enriched in larger-sized LDs, whereas lipophagic vesicles were restricted to small LDs as revealed by immunofluorescence, electron microscopy, and Western blot of size-separated LDs. These findings provide new evidence indicating a synergistic relationship whereby lipolysis targets larger-sized LDs to produce both size-reduced and nascently synthesized small LDs that are amenable for lipophagic internalization.