Progressive retinal degeneration is the underlying feature of many human retinal dystrophies. Previous work using Drosophila as a model system and analysis of specific mutations in human rhodopsin have uncovered a connection between rhodopsin endocytosis and retinal degeneration. In these mutants, rhodopsin and its regulatory protein arrestin form stable complexes, and endocytosis of these complexes causes photoreceptor cell death. In this study we show that the internalized rhodopsin is not degraded in the lysosome but instead accumulates in the late endosomes. Using mutants that are defective in late endosome to lysosome trafficking, we were able to show that rhodopsin accumulates in endosomal compartments in these mutants and leads to light-dependent retinal degeneration. Moreover, we also show that in dying photoreceptors the internalized rhodopsin is not degraded but instead shows characteristics of insoluble proteins. Together these data implicate buildup of rhodopsin in the late endosomal system as a novel trigger of death of photoreceptor neurons.