Phagocytosis and degradation of photoreceptor outer segments (POS) by retinal pigment epithelium (RPE) is fundamental to vision. Autophagy is also responsible for bulk degradation of cellular components, but its role in POS degradation is not well understood. We report that the morning burst of RPE phagocytosis coincided with the enzymatic conversion of autophagy protein LC3 to its lipidated form. LC3 associated with single-membrane phagosomes containing engulfed POS in an Atg5-dependent manner that required Beclin1, but not the autophagy preinitiation complex. The importance of this process was verified in mice with Atg5-deficient RPE cells that showed evidence of disrupted lysosomal processing. These mice also exhibited decreased photoreceptor responses to light stimuli and decreased chromophore levels that were restored with exogenous retinoid supplementation. These results establish that the interplay of phagocytosis and autophagy within the RPE is required for both POS degradation and the maintenance of retinoid levels to support vision.