Mutations in the arginine vasopressin (AVP)‐neurophysin II (NP‐II) gene that affect the folding and transport of the prohormone result in loss of secretion of the anti‐diuretic hormone AVP from pituitary nerve terminals and cause autosomal dominant familial neurohypophyseal diabetes insipidus (adFNDI). One such mutation consists of the replacement of a Cys residue at position 98 with a stop codon (C98X) in the AVP precursor (corresponding to C67X in NP domain). In neuroblastoma cells over‐expressing this truncated AVP precursor autophagy, a macromolecular degradation process, was shown to be essential for assuring cell survival. In the present study, we investigated the role of the Akt pro‐survival signalling in the regulation of autophagy and of apoptosis linked with the handling of C98X AVP. Impairing autophagy‐lysosomal sequestration or cathepsin D (CD)‐mediated proteolysis triggered the activation of the intrinsic death pathway of apoptosis in C98X‐expressing cells, but not in the wild‐type ‐AVP‐expressing cells. This was shown by the expression of a Vps34 dominant negative, which down‐regulates the PI3k class III‐dependent signalling needed for autophagosome (APH) formation, by genetic silencing as a result of RNA interference (RNAi) of Lamp2, a protein indispensable for the fusion of APHs with lysosomes, and by RNAi silencing of the lysosomal protease CD. Ectopic expression of either the wild‐type or the mutated C98X AVP altered neither the expression nor the phosphorylation of the pro‐survival signalling molecule Akt. Strikingly, the ectopic adenoviral‐directed expression of a constitutively active Akt, instead of preserving cell survival, resulted in the suppression of autophagy, and precipitated Bax‐mediated cell death. The present data demonstrate the need for autophagy‐mediated degradation of mutated C98X peptides, which otherwise become toxic to the cell, and suggest that, in the presence of mis‐folded proteins, the stimulation of the Akt signalling counteracts the beneficial effects of autophagy and precipitates cell death. It follows that growth factors impinging on the Akt pathway may have deleterious effect in neurones expressing mutant neuropeptides. This can provide an explanation for the late onset and progressive neuronal cell loss observed in hypothalamic magnocellular neurones of adFNDI patients.