AbstractLissencephaly-1 (Lis1) is a key cofactor for dynein-mediated intracellular transport towards the minus-ends of microtubules (MTs). It remains unclear whether Lis1 serves as an inhibitor or an activator of mammalian dynein motility. Here we use single-molecule imaging and optical trapping to show that Lis1 does not directly alter the stepping and force production of individual dynein motors assembled with dynactin and a cargo adaptor. Instead, Lis1 binding releases dynein from its auto-inhibited state and thereby promotes the formation of an active complex with dynactin. Lis1 also favors recruitment of two dyneins to dynactin, resulting in increased velocity, higher force production and more effective competition against kinesin in a tug-of-war. Lis1 dissociates from motile complexes, indicating that its primary role is to orchestrate the assembly of the transport machinery. These results provide a mechanistic explanation for why Lis1 is required for efficient transport of many dynein-associated cargoes in cells.