Summary Autophagy is a central degradative pathway highly conserved among eukaryotes, including microalgae, which remains unexplored in extremophilic organisms. In this study, we described and characterized autophagy in the newly identified extremophilic green microalga Chlamydomonas urium, which was isolated from an acidic environment. The nuclear genome of C. urium was sequenced, assembled and annotated in order to identify autophagy‐related genes. Transmission electron microscopy, immunoblotting, metabolomic and photosynthetic analyses were performed to investigate autophagy in this extremophilic microalga. The analysis of the C. urium genome revealed the conservation of core autophagy‐related genes. We investigated the role of autophagy in C. urium by blocking autophagic flux with the vacuolar ATPase inhibitor concanamycin A. Our results indicated that inhibition of autophagic flux in this microalga resulted in a pronounced accumulation of triacylglycerols and lipid droplets (LDs). Metabolomic and photosynthetic analyses indicated that C. urium cells with impaired vacuolar function maintained an active metabolism. Such effects were not observed in the neutrophilic microalga Chlamydomonas reinhardtii. Inhibition of autophagic flux in C. urium uncovered an active recycling of LDs through lipophagy, a selective autophagy pathway for lipid turnover. This study provided the metabolic basis by which extremophilic algae are able to catabolize lipids in the vacuole.