Cytoplasmic dynein-1 (“dynein”) is a minus-end-directed microtubule-based motor that couples ATP hydrolysis to force generation to move diverse cargos. Dynein is a single-chain AAA+ ATPase that contains 6 AAA+ domains, where AAA1-4 bind nucleotide and AAA1 drives the motor. Lis1 is a conserved and ubiquitous dynein regulator. Previously, we showed that Lis1 binds to dynein at AAA4 and causes dynein to slow down and remain attached to microtubules, even in the presence of ATP, which usually releases dynein from its track. Interestingly, while AAA3 is occupied by ADP when dynein is walking, either the absence of nucleotide or the presence of ATP lead to a motor that behaves like its Lis1-regulated state. This observation led us to hypothesize that Lis1 acts through AAA3. To test this we determined how the nucleotide state at AAA3 affects Lis1's regulation of dynein. When AAA3 is nucleotide-free, Lis1 increases dynein's microtubule binding affinity, as we had previously observed, Surprisingly, however, when AAA3 contains ATP, Lis1 has the opposite effect, leading to dynein's detachment from microtubules. High-resolution cryo-electron microscopy structures of dynein-Lis1 complexes revealed the basis for these puzzling effects. While a single Lis1 beta propeller (Lis1 is a dimer) binds to dynein in the AAA3-(no nucleotide) state, a second Lis1 beta propeller is bound to the motor in the AAA3-ATP state. This novel second site is located on dynein's coiled coil “stalk”, which connects dynein's motor domain to its microtubule binding domain. Importantly, the sequence of this site is conserved only in those dyneins that are regulated by Lis1. Our work revealed that Lis1 can act either as a microtubule anchor or a release factor for dynein, depending upon the nucleotide occupancy at AAA3. We propose a new model for how Lis1 serves as a dual regulator of dynein activity in cells.