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 macroautophagy. 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.