SUMMARY Lewy bodies (LBs), rich in α-synuclein, are a hallmark of Parkinson’s disease (PD). Understanding their biogenesis is likely to provide insight into the pathophysiology of PD, yet a cellular model for LB formation remains elusive. The realization that the immune challenge is a trigger for neurodegenerative diseases has been a breakthrough in the understanding of PD. Here, iPSC-derived human dopaminergic (DA) neurons from multiple healthy donors were found to form LB-like inclusions following treatment with α- synuclein preformed fibrils, but only when coupled to an immune challenge (interferon-gamma or interleukin-1 beta) or when co-cultured with activated microglia. Human cortical neurons derived from the same iPSC lines did not form LB-like inclusions. Exposure to interferon-gamma impairs autophagy in a lysosomal-specific manner in vitro, similar to the disruption of proteostasis pathways that contribute to PD. We find that lysosomal membrane proteins LAMP1 and LAMP2 and transcription factors regulating lysosomal biogenesis and function are downregulated in DA but not cortical neurons. Finally, due to the excellent sample preservation afforded by cells compared to post-mortem PD brain tissue, we conclude that the LB-like inclusions in DA neurons are membrane-bound, suggesting they are not limited to the cytoplasmic compartment. In Brief Bayati et al. identify that iPSC-derived dopaminergic neurons undergoing a dual hit treatment of exogenous α-synuclein fibrils and proinflammatory cytokines form Lewy body-like inclusions. The dual hit treatment also led to the downregulation of lysosomal proteins. Characterization of inclusions revealed that inclusions were membrane-bound and LC3B-positive, suggesting they are dysfunctional autophagosomes. Highlights α-synuclein preformed fibril administration coupled with Interferon-gamma exposure leads dopaminergic neurons to form Lewy body-like inclusions Inclusions are filamentous, membranous, and filled with aberrant organelles Impaired autophagic flux and downregulation of TFEB, NRF2, LAMP1, and LAMP2 correlated with inclusion formation Activation of NRF2 through the treatment of neurons with the antioxidant perillaldehyde, prevents inclusion formation