Autophagy can either promote or inhibit cell death in different cellular contexts. In this study, we investigated the role of autophagy in ATG5 knockout (KO) cell line established using CRISPR/Cas9 system. In ATG5 KO cells, RT‐PCR and immunoblot of LC3 confirmed the functional gene knockout. We found that knockout of ATG5 significantly increased proliferation of NIH 3T3 cells. In particular, autophagy deficiency enhanced susceptibility to cellular transformation as determined by an in vitro clonogenic survival assay and a soft agar colony formation assay. We also found that ATG5 KO cells had a greater migration ability as compared to wild‐type (WT) cells. Moreover, ATG5 KO cells were more resistant to treatment with a Src family tyrosine kinase inhibitor (PP2) than WT cells were. Cyto‐ID Green autophagy assay revealed that PP2 failed to induce autophagy in ATG5 KO cells. PP2 treatment decreased the percentage of cells in the S and G2/M phases among WT cells but had no effect on cell cycle distribution of ATG5 KO cells, which showed a high percentage of cells in the S and G2/M phases. Additionally, the proportion of apoptotic cells significantly decreased after treatment of ATG5 KO cells with PP2 in comparison with WT cells. We found that expression levels of p53 were much higher in ATG5 KO cells. The ATG5 KO seems to lead to compensatory upregulation of the p53 protein because of a decreased apoptosis rate. Taken together, our results suggest that autophagy deficiency can lead to malignant cell transformation and resistance to PP2. ATG5 knockout cells show morphological transformation and anchorage‐independent growth‐ ATG5 KO cells have a lower proportion of the apoptotic cell population as a way to escape cell death in response to PP2.