Two coding variants in the apolipoprotein L1 (APOL1) gene (termed G1 and G2) are strongly associated with increased risk of nondiabetic kidney disease in people of recent African ancestry. The mechanisms by which the risk variants cause kidney damage, although not well-understood, are believed to involve injury to glomerular podocytes. The intracellular localization and function of APOL1 in podocytes remain unclear, with recent studies suggesting possible roles in the endoplasmic reticulum (ER), mitochondria, endosomes, lysosomes, and autophagosomes. Here, we demonstrate that APOL1 also localizes to intracellular lipid droplets (LDs). While a large fraction of risk variant APOL1 (G1 and G2) localizes to the ER, a significant proportion of wild-type APOL1 (G0) localizes to LDs. APOL1 transiently interacts with numerous organelles, including the ER, mitochondria, and endosomes. Treatment of cells that promote LD formation with oleic acid shifted the localization of G1 and G2 from the ER to LDs, with accompanying reduction of autophagic flux and cytotoxicity. Coexpression of G0 APOL1 with risk variant APOL1 enabled recruitment of G1 and G2 from the ER to LDs, accompanied by reduced cell death. The ability of G0 APOL1 to recruit risk variant APOL1 to LDs may help explain the recessive pattern of kidney disease inheritance. These studies establish APOL1 as a bona fide LD-associated protein, and reveal that recruitment of risk variant APOL1 to LDs reduces cell toxicity, autophagic flux, and cell death. Thus, interventions that divert APOL1 risk variants to LDs may serve as a novel therapeutic strategy to alleviate their cytotoxic effects.