Tuberous Sclerosis Complex (TSC) is caused by TSC1 or TSC2 mutations, resulting in hyperactivation of the mechanistic target of rapamycin complex 1 (mTORC1). TSC can affect multiple organs, including pulmonary lymphangioleiomyomatosis (LAM). LAM which affects only women, occurs in two forms, sporadic and TSC-associated. Transcription factor EB (TFEB), a master regulator of lysosome biogenesis and lysosomal exocytosis, is negatively regulated by mTORC1 through a RAG GTPase-dependent phosphorylation. Here we show that lysosomal biogenesis is increased in TSC-associated renal tumors, pulmonary LAM, kidneys from Tsc2+/− mice, and TSC1/2-deficient cells via a TFEB-dependent mechanism. Lysosomal exocytosis, the process through which the lysosome fuses with the plasma membrane and releases lysosomal destructive enzymes in the extracellular space, is also increased in TSC1/2-deficient cells. Lysosomal exocytosis is strictly dependent on the activity of MCOLN1, a calcium channel. MCOLN1 is upregulated in TSC in a TFEB-dependent fashion. Importantly, TFEB knockout in a kidney-specific mouse model of TSC (KspCre; Tsc2fl/fl) almost completely abolishes kidney cyst formation and normalizes the kidney to body weight ratio. These effects of TFEB are unexpected, since in cells with hyperactive mTORC1 TFEB should be phosphorylated and sequestered in the cytoplasm. Instead, in TSC1/2-deficient cells, TFEB is hypo-phosphorylated at mTORC1-dependent sites, resulting in nuclear localization and hyperactivation. Importantly, overexpression of folliculin (FLCN), a GTPase activating protein for RAGC, increases TFEB phosphorylation at the mTORC1 sites in TSC2-deficient cells. Moreover, overexpression of constitutively active RAGC is sufficient to relocalize TFEB to the cytoplasm. These findings establish the TSC proteins as critical regulators of lysosomal biogenesis via TFEB and RAGC and identify TFEB as a critical factor in TSC pathogenesis. We postulate that TFEB-dependent lysosomal exocytosis could be responsible for the cystic lung destruction seen in women with LAM.