Aberrant metabolic forms of the prion protein (PrP), membrane-associated (Ctm)PrP and cytosolic (cyPrP) interact with the cytosolic ubiquitin E3 ligase, Mahogunin Ring Finger-1 (MGRN1) and affect lysosomes. MGRN1 also interacts with and ubiquitinates TSG101, an ESCRT-I protein, involved in endocytosis. We report that MGRN1 modulates macroautophagy. In cultured cells, functional depletion of MGRN1 or overexpression of (Ctm)PrP and cyPrP blocks autophagosome-lysosome fusion, alleviates the autophagic flux and its degradative competence. Concurrently, the degradation of cargo from the endo-lysosomal pathway is also affected. This is significant because catalytic inactivation of MGRN1 alleviates fusion of lysosomes with either autophagosomes (via amphisomes) or late endosomes (either direct or mediated through amphisomes), without drastically perturbing maturation of late endosomes, generation of amphisomes or lysosomal proteolytic activity. The compromised lysosomal fusion events are rescued by overexpression of TSG101 and/or its monoubiquitination in the presence of MGRN1. Thus, for the first time we elucidate that MGRN1 simultaneously modulates both autophagy and heterophagy via ubiquitin-mediated post-translational modification of TSG101.