Autophagy involves de novo formation of double membrane-bound structures called autophagosomes, which engulf material to be degraded in lytic compartments. Atg8 is a ubiquitin-like protein required for this process in Saccharomyces cerevisiae that can be conjugated to the lipid phosphatidylethanolamine by a ubiquitin-like system. Here, we show using an in vitro system that Atg8 mediates the tethering and hemifusion of membranes, which are evoked by the lipidation of the protein and reversibly modulated by the deconjugation enzyme Atg4. Mutational analyses suggest that membrane tethering and hemifusion observed in vitro represent an authentic function of Atg8 in autophagosome formation in vivo. In addition, electron microscopic analyses indicate that these functions of Atg8 are involved in the expansion of autophagosomal membranes. Our results provide further insights into the mechanisms underlying the unique membrane dynamics of autophagy and also indicate the functional versatility of ubiquitin-like proteins.