Autophagy is a central mechanism by which hepatocytes catabolize lipid droplets (LDs). Currently, the regulatory mechanisms that control this important process are poorly defined. The small guanosine triphosphatase (GTPase) Rab7 has been implicated in the late endocytic pathway and is known to associate with LDs, although its role in LD breakdown has not been tested. In this study, we demonstrate that Rab7 is indispensable for LD breakdown (“lipophagy”) in hepatocytes subjected to nutrient deprivation. Importantly, Rab7 is dramatically activated in cells placed under nutrient stress; this activation is required for the trafficking of both multivesicular bodies and lysosomes to the LD surface during lipophagy, resulting in the formation of a lipophagic “synapse.” Depletion of Rab7 leads to gross morphological changes of multivesicular bodies, lysosomes, and autophagosomes, consequently leading to attenuation of hepatocellular lipophagy. Conclusion: These findings provide additional support for the role of autophagy in hepatocellular LD catabolism while implicating the small GTPase Rab7 as a key regulatory component of this essential process. (Hepatology 2015;61:1896–1907)