In atherosclerotic lesions, vascular smooth muscle cells (VSMCs) represent half of the foam cell population, which is characterized by an aberrant accumulation of undigested lipids within lysosomes. Loss of lysosome function impacts VSMC homeostasis and disease progression. Understanding the molecular mechanisms underlying lysosome dysfunction in these cells is, therefore, crucial. We identify cholesteryl hemiazelate (ChA), a stable oxidation end-product of cholesteryl-polyunsaturated fatty acid esters, as an inducer of lysosome malfunction in VSMCs. ChA-treated VSMCs acquire a foam-cell-like phenotype, characterized by enlarged lysosomes full of ChA and neutral lipids. The lysosomes are perinuclear and exhibit degradative capacity and cargo exit defects. Lysosome luminal pH is also altered. Even though the transcriptional response machinery and autophagy are not activated by ChA, the addition of recombinant lysosomal acid lipase (LAL) is able to rescue lysosome dysfunction. ChA significantly affects VSMC proliferation and migration, impacting atherosclerosis. In summary, this work shows that ChA is sufficient to induce lysosomal dysfunction in VSMCs, that, in ChA-treated VSMCs, neither lysosome biogenesis nor autophagy are triggered, and, finally, that recombinant LAL can be a therapeutic approach for lysosomal dysfunction.