Atg8 is a ubiquitin-like protein that is required, along with its lipidation system, for autophagy in all eukaryotic cells. The lipidated form of Atg8 is anchored on the autophagosomal membrane during autophagy. Here, we demonstrate a previously unknown role for Atg8 in vacuolar membrane dynamics. In the methylotrophic yeast Pichia pastoris, vacuoles were found to fuse to become a single spherical vacuole during adaptation from glucose-to methanol-containing medium. Atg8 is responsible for the vacuolar fusion in P. pastoris during this adaptation to methanol. Although vacuole fusion required processing of Atg8 at the C-terminus, it did not require lipidation of Atg8 for autophagy. This is the first report of the function of any Atg8 protein family member in a process other than autophagy that is independent of lipidation.