Lipid metabolism disorders in both neurons and glial cells have been found in neurodegenerative (ND) patients and animal models. However, the pathological connection between lipid droplets and NDs remains poorly understood. The recent work has highlighted the utility of a neuron-specific Arf1-knockout mouse model and corresponding cells for elucidating the nexus between lipid metabolism disorders and amyotrophic lateral sclerosis (ALS) and multiple sclerosis (MS). In this study, it is found that Arf1 deficiency first induced surplus fatty acid synthesis through the AKT-mTORC1-SREBP1-FASN axis, which further triggered endoplasmic reticulum (ER)-mitochondrial stress cascade via calcium flux. The organelle stress cascade further caused mitochondrial DNA (mtDNA) to be released into cytoplasm. Concurrently, the FASN-driven fatty acid synthesis in the Arf1-deficient neurons might also induce accumulation of sphingolipids in lysosomes that caused dysfunction of autophagy and lysosomes, which further promoted lysosomal stress and mitochondria-derived extracellular vesicles (MDEVs) release. The released MDEVs carried mtDNA into microglia to activate the inflammatory pathways and neurodegeneration. The studies on neuronal lipid droplets (LDs) and recent studies of microglial LDs suggest a unified pathological function of LDs in NDs: activating the inflammatory pathways in microglia. This finding potentially provides new therapeutic strategies for NDs.