Alzheimer’s disease-associated amyloid beta (Aβ) proteins accumulate in the outer retina with increasing age and in eyes of age-related macular degeneration (AMD) patients. To study Aβ-induced retinopathy, wild-type mice were injected with nanomolar human oligomeric Aβ1-42, which recapitulate the Aβ burden reported in human donor eyes. In vitro studies investigated the cellular effects of Aβ in endothelial and retinal pigment epithelial (RPE) cells. Results show subretinal Aβ-induced focal AMD-like pathology within 2 weeks. Aβ exposure caused endothelial cell migration, and morphological and barrier alterations to the RPE. Aβ co-localized to late-endocytic compartments of RPE cells, which persisted despite attempts to clear it through upregulation of lysosomal cathepsin B, revealing a novel mechanism of lysosomal impairment in retinal degeneration. The rapid upregulation of cathepsin B was out of step with the prolonged accumulation of Aβ within lysosomes, and contrasted with enzymatic responses to internalized photoreceptor outer segments (POS). Furthermore, RPE cells exposed to Aβ were identified as deficient in cargo-carrying lysosomes at time points that are critical to POS degradation. These findings imply that Aβ accumulation within late-endocytic compartments, as well as lysosomal deficiency, impairs RPE function over time, contributing to visual defects seen in aging and AMD eyes.