Accumulation of ubiquitinated proteins in cytoplasmic and/or nuclear inclusions is a hallmark of several diseases associated with premature cell death. SQSTM1/p62 is known to bind ubiquitinated substrates and aid their aggregation and degradation by macro-autophagy. We show here that p62 is required to recruit the large phosphoinositide-binding protein ALFY to cytoplasmic p62 bodies generated upon amino acid starvation or puromycin-treatment. ALFY, as well as p62, is required for formation and autophagic degradation of cytoplasmic ubiquitin-positive inclusions. Moreover, both p62 and ALFY localize to nuclear promyleocytic leukemia (PML) bodies. The Drosophila p62 homologue Ref(2)P accumulates in ubiquitinated inclusions in the brain of flies carrying mutations in the ALFY homologue Blue cheese, demonstrating that ALFY is required for autophagic degradation of p62-associated ubiquitinated proteins in vivo. We conclude that p62 and ALFY interact to organize misfolded, ubiquitinated proteins into protein bodies that become degraded by autophagy.