Staphylococcus aureus is a major human pathogen causing multiple pathologies, from cutaneous lesions to life-threatening sepsis. Although neutrophils contribute to immunity against S. aureus, multiple lines of evidence suggest that these phagocytes can provide an intracellular niche for staphylococcal dissemination. However, the mechanism of neutrophil subversion by intracellular S. aureus remains unknown. Targeting of intracellular pathogens by autophagy is recognised as an important component of host innate immunity, but whether autophagy is beneficial or detrimental to S. aureus-infected hosts remains controversial. Here, using larval zebrafish we show that S. aureus is rapidly decorated by the autophagy marker Lc3 following engulfment by macrophages and neutrophils. Upon phagocytosis by neutrophils, Lc3-positive, non-acidified spacious phagosomes are formed. This response is dependent on phagocyte NADPH oxidase as both cyba knockdown and diphenyleneiodonium (DPI) treatment inhibited Lc3 decoration of phagosomes. Importantly, NADPH oxidase inhibition diverted neutrophil S. aureus processing into tight acidified vesicles, which resulted in increased host resistance to the infection. Some intracellular bacteria within neutrophils were also tagged by p62-GFP fusion protein and loss of p62 impaired host defence. Taken together, we have shown that intracellular handling of S. aureus by neutrophils is best explained by Lc3-associated phagocytosis (LAP), which appears to provide an intracellular niche for bacterial pathogenesis, while the selective autophagy receptor p62 is host-protective. The antagonistic roles of LAP and p62-mediated pathways in S. aureus-infected neutrophils may explain the conflicting reports relating to antistaphylococcal autophagy and provide new insights for therapeutic strategies against antimicrobial resistant staphylococci.