Hydra, a freshwater cnidarian possesses high regenerative potential and negligible aging. However, the Cold Sensitive H. oligactis strain (Ho_CS) induces aging upon the loss of interstitial stem cell lineage. Aging in Ho_CS is characterized by the loss of budding, regeneration and degeneration followed by death of animals within three months. This result is surprising as epithelial cells of most Hydra strains adapt to the loss of i-cells and sustain the animal. We measured proliferation, autophagy and protein aggregation in epithelial cells and found all three processes modified upon aging induction. Our cellular and molecular analysis provides evidence for deficient epithelial autophagy driving aging in Ho_CS. Chronic exposure to Rapamycin positively impacts the lifespan and fitness by modifying engulfment behavior, lipid metabolism and self-renewal of epithelial stem cells in autophagy independent fashion. We demonstrate that H. oligactis provides potent model system to study the relationship between autophagy, stem cells and aging.