Reactive oxygen species (ROS) are essential for induction of protective autophagy, however unexpected rise in cellular ROS levels overpowers the cellular defense and therefore promotes the programmed apoptotic cell death. We recently reported that inhibition of thioredoxin reductase (TrxR) in starving SH-SY5Y cells interrupted autophagy flux by induction of lysosomal deficiency and promoted apoptosis. (Free Radic Biol Med. 2016: 101:53-70). Here, we aimed to elucidate the underlying mechanisms during autophagy-apoptosis interplay, and focused on regulation of cathepsin B (CTSB) and L (CTSL), the pro-apoptotic and pro-autophagy cathepsins respectively. Inhibition of TrxR by Auranofin, caused lysosomal membrane permeabilization (LMP) that was associated with a significant upregulation of CTSB activity, despite no significant changes in CTSB protein level. Conversely, a significant rise in CTSL protein levels was observed without any apparent change in CTSL activity. Using thiol-trapping techniques to examine the differential sensitivity of cathepsins to oxidative stress, we discovered that Auranofin-mediated oxidative stress interferes with CTSL processing and thereby interrupts its pro-autophagy function. No evidence of CTSB susceptibility to oxidative stress was observed. Our data suggest that cellular fate in these conditions is mediated by two concurrent systems: while oxidative stress prevents the protective autophagy by inhibition of CTSL processing, concomitantly, apoptosis is induced by increasing lysosomal membrane permeability and leakage of CTSB into cytoplasm. Inhibition of CTSB in these conditions inhibited apoptosis and increased cell viability. To our knowledge this is the first report uncovering the impact of redox environment on autophagy-apoptosis interplay in neuronal cells.