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Lysosomes are vital organelles vulnerable to injuries from diverse materials. Failure to repair or sequester damaged lysosomes poses a threat to cell viability. Here we report that cells exploit a sphingomyelin-based lysosomal repair pathway that operates independently of ESCRT to reverse potentially lethal membrane damage. Various conditions perturbing organelle integrity trigger a rapid calcium-activated scrambling and cytosolic exposure of sphingomyelin. Subsequent metabolic conversion of sphingomyelin by neutral sphingomyelinases on the cytosolic surface of injured lysosomes promotes their repair, also when ESCRT function is compromised. Conversely, blocking turnover of cytosolic sphingomyelin renders cells more sensitive to lysosome-damaging drugs. Our data indicate that calcium-activated scramblases, sphingomyelin, and neutral sphingomyelinases are core components of a previously unrecognized membrane restoration pathway by which cells preserve the functional integrity of lysosomes.