Mitochondrial DNA (mtDNA) is exposed to multiple insults produced by normal cellular function. Upon mtDNA replication stress, the mitochondrial genome transfers to endosomes for degradation. Using proximity biotinylation, we found that mtDNA stress leads to the rewiring of the mitochondrial proximity proteome, increasing mitochondria’s association with lysosomal and vesicle-related proteins. Among these, the retromer complex, particularly VPS35, plays a pivotal role by extracting mitochondrial components. The retromer promotes the formation of mitochondrial-derived vesicles shuttled to lysosomes. The mtDNA, however, directly shuttles to a recycling organelle in a BAX-dependent manner. Moreover, using a Drosophila model carrying a long deletion on the mtDNA (ΔmtDNA), we found that ΔmtDNA activates a specific transcriptome profile to counteract mitochondrial damage. Here, Vps35 expression restores mtDNA homoplasmy and alleviates associated defects. Hence, we demonstrate the existence of a previously unknown quality control mechanism for the mitochondrial matrix and the essential role of lysosomes in mtDNA turnover to relieve mtDNA damage.