Size and copy number of organelles are influenced by an equilibrium of membrane fusion and fission. We studied this equilibrium on vacuoles-the lysosomes of yeast. Vacuole fusion can readily be reconstituted and quantified in vitro, but it had not been possible to study fission of the organelle in a similar way. Here we present a cell-free system that reconstitutes fragmentation of purified yeast vacuoles (lysosomes) into smaller vesicles. Fragmentation in vitro reproduces physiological aspects. It requires the dynamin-like GTPase Vps1p, V-ATPase pump activity, cytosolic proteins, and ATP and GTP hydrolysis. We used the in vitro system to show that the vacuole-associated TOR complex 1 (TORC1) stimulates vacuole fragmentation but not the opposing reaction of vacuole fusion. Under nutrient restriction, TORC1 is inactivated, and the continuing fusion activity then dominates the fusion/fission equilibrium, decreasing the copy number and increasing the volume of the vacuolar compartment. This result can explain why nutrient restriction not only induces autophagy and a massive buildup of vacuolar/lysosomal hydrolases, but also leads to a concomitant increase in volume of the vacuolar compartment by coalescence of the organelles into a single large compartment.