Natural genetic variation can determine the outcome of an infection, and often reflects the co-evolutionary battle between hosts and pathogens. We previously found that a natural variant of the nematode Caenorhabditis elegans from Hawaii (HW) has increased resistance against natural microsporidian pathogens in the Nematocida genus, when compared to the standard laboratory strain of N2. In particular, HW animals can clear infection, while N2 animals cannot. In addition, HW animals have lower levels of initial colonization of Nematocida inside intestinal cells, compared to N2. Here we investigate how this natural variation in resistance relates to autophagy. We found that there is much better targeting of autophagy-related machinery to parasites under conditions where they are cleared. In particular, ubiquitin targeting to Nematocida cells correlates very well with their subsequent clearance in terms of timing, host strain and age, as well as species of Nematocida. Furthermore, clearance correlates with targeting of the LGG-2/LC3 autophagy protein to parasite cells, with HW animals having much more efficient targeting of LGG-2 to parasite cells than N2 animals. Surprisingly, however, we found that LGG-2 is not required to clear infection. Instead, we found that LGG-2/LC3 regulates Nematocida colonization inside intestinal cells. Interestingly, LGG-2/LC3 regulates intracellular colonization only in the HW strain, and not in N2. Altogether these results demonstrate that there is natural genetic variation in an LGG-2-dependent process that regulates microsporidia colonization inside intestinal cells, although not microsporidia clearance.