Abnormal accumulation of Aβ (amyloid β) within AEL (autophagy-endosomal-lysosomal) vesicles is a prominent neuropathological feature of AD (Alzheimer's disease), but the mechanism of accumulation within vesicles is not clear. We express secretory forms of human Aβ1-40 or Aβ1-42 in Drosophila neurons and observe preferential localization of Aβ1-42 within AEL vesicles. In young animals, Aβ1-42 appears to associate with plasma membrane, whereas Aβ1-40 does not, suggesting that recycling endocytosis may underlie its routing to AEL vesicles. Aβ1-40, in contrast, appears to partially localize in extracellular spaces in whole brain and is preferentially secreted by cultured neurons. As animals become older, AEL vesicles become dysfunctional, enlarge and their turnover appears delayed. Genetic inhibition of AEL function results in decreased Aβ1-42 accumulation. In samples from older animals, Aβ1-42 is broadly distributed within neurons, but only the Aβ1-42 within dysfunctional AEL vesicles appears to be in an amyloid-like state. Moreover, the Aβ1-42-containing AEL vesicles share properties with AD-like extracellular plaques. They appear to be able to relocate to extracellular spaces either as a consequence of age-dependent neurodegeneration or a non-neurodegenerative separation from host neurons by plasma membrane infolding. We propose that dysfunctional AEL vesicles may thus be the source of amyloid-like plaque accumulation in Aβ1-42-expressing Drosophila with potential relevance for AD.