SummaryRegulation is central to the functional versatility of cytoplasmic dynein, a motor involved in intracellular transport, cell division, and neurodevelopment. Previous work established that Lis1, a conserved and ubiquitous regulator of dynein, binds to its motor domain and induces a tight microtubule-binding state in dynein. The work we present here—a combination of biochemistry, single-molecule assays, cryo-electron microscopy and in vivo experiments—led to the surprising discovery that Lis1 has two opposing modes of regulating dynein, being capable of inducing both low and high affinity for the microtubule. We show that these opposing modes depend on the stoichiometry of Lis1 binding to dynein and that this stoichiometry is regulated by the nucleotide state of dynein’s AAA3 domain. We present data on the in vitro and in vivo consequences of abolishing the novel Lis1-induced weak microtubule-binding state in dynein and propose a new model for the regulation of dynein by Lis1.