Abstract Non-neovascular or dry age-related macular degeneration (AMD) is a multi-factorial disease with degeneration of the aging retinal-pigmented epithelium (RPE). Lysosomes play a crucial role in RPE health via phagocytosis and autophagy, which are regulated by transcription factor EB/E3 (TFEB/E3). Here, we find that increased AKT2 inhibits PGC-1α to downregulate SIRT5, which we identify as an AKT2 binding partner. Crosstalk between SIRT5 and AKT2 facilitates TFEB-dependent lysosomal function in the RPE. AKT2/SIRT5/TFEB pathway inhibition in the RPE induced lysosome/autophagy signaling abnormalities, disrupted mitochondrial function and induced release of debris contributing to drusen. Accordingly, AKT2 overexpression in the RPE caused a dry AMD-like phenotype in aging Akt2 KI mice, as evident from decline in retinal function. Importantly, we show that induced pluripotent stem cell-derived RPE encoding the major risk variant associated with AMD (complement factor H; CFH Y402H) express increased AKT2, impairing TFEB/TFE3-dependent lysosomal function. Collectively, these findings suggest that targeting the AKT2/SIRT5/TFEB pathway may be an effective therapy to delay the progression of dry AMD.