<jats:title>Abstract</jats:title><jats:p>SQSTM1/p62, as a major autophagy receptor, forms droplets that are critical for cargo recognition, nucleation, and clearance. p62 droplets also function as liquid assembly platforms to allow the formation of autophagosomes at their surfaces. It is unknown how p62-droplet formation is regulated under physiological or pathological conditions. Here, we report that p62-droplet formation is selectively blocked by inflammatory toxicity, which induces cleavage of p62 by caspase-6 at a novel cleavage site D256, a conserved site across human, mouse, rat, and zebrafish. The N-terminal cleavage product is relatively stable, whereas the C-terminal product appears undetectable. Using a variety of cellular models, we show that the p62 N-terminal caspase-6 cleavage product (p62-N) plays a dominant-negative role to block p62-droplet formation. In vitro p62 phase separation assays confirm this observation. Dominant-negative regulation of p62-droplet formation by caspase-6 cleavage attenuates p62 droplets dependent autophagosome formation. Our study suggests a novel pathway to modulate autophagy through the caspase-6–p62 axis under certain stress stimuli.</jats:p>