Autophagy is a cellular process that degrades damaged organelles and aggregated proteins. Hypothalamic autophagy is important for regulation of food intake and energy expenditure. High-fat diet induces hypothalamic injury through endoplasmic reticulum (ER) stress and apoptosis in rodents. We demonstrate here that autophagy plays a role in protecting hypothalamic neuronal cells from ER stress-induced apoptosis. Treatment of palmitate induces ER stress and autophagy in hypothalamic neuronal cells, N41. However, prolonged treatment of palmitate impairs autophagy and increases apoptosis. When palmitate-induced autophagy is enhanced by rapamycin, an autophagy inducer, ER stress and apoptosis are decreased. On the other hand, treatment of bafilomycin, an autophagy inhibitor, increases ER stress and apoptosis. In addition, pretreatment of ER stress reducer to palmitate decreases both autophagy and apoptosis. Taken together, our results indicate that autophagy has a protective role in cellular homeostasis by regulating ER stress. Our study suggests that modulation of autophagy is a possible therapeutic strategy for metabolic disorders such as obesity and diabetes.