We have previously demonstrated that Stat3 regulates lysosomal-mediated programmed cell death (LM-PCD) during mouse mammary gland involution in vivo. However, the mechanism that controls the release of lysosomal cathepsins to initiate cell death in this context has not been elucidated. We show here that Stat3 regulates the formation of large lysosomal vacuoles that contain triglyceride. Furthermore, we demonstrate that milk fat globules (MFGs) are toxic to epithelial cells and that, when applied to purified lysosomes, the MFG hydrolysate oleic acid potently induces lysosomal leakiness. Additionally, uptake of secreted MFGs coated in butyrophilin 1A1 is diminished in Stat3-ablated mammary glands and loss of the phagocytosis bridging molecule MFG-E8 results in reduced leakage of cathepsins in vivo. We propose that Stat3 regulates LM-PCD in mouse mammary gland by switching cellular function from secretion to uptake of MFGs. Thereafter, perturbation of lysosomal vesicle membranes by high levels of free fatty acids results in controlled leakage of cathepsins culminating in cell death.