During clathrin-mediated endocytosis, the GTPase dynamin promotes formation of clathrin-coated vesicles, but its mode of action is unresolved. We provide evidence that a switch in three functional states of dynamin (dimers, tetramers, rings/spirals) coordinates its GTPase cycle. Dimers exhibit negative cooperativity whereas tetramers exhibit positive cooperativity with respect to GTP. Our study identifies tetramers as the kinetically most stable GTP-bound conformation of dynamin, which is required to promote further assembly into higher order structures such as rings or spirals. In addition, using fluorescence lifetime imaging microscopy, we show that interactions between dynamin and auxilin in cells are GTP-, endocytosis- and tetramer-dependent. Furthermore, we show that the cochaperone activity of auxilin is required for constriction of clathrin-coated pits, the same early step in endocytosis known to be regulated by the lifetime of dynamin:GTP. Together, our findings support the model that the GTP-bound conformation of dynamin tetramers stimulates formation of constricted coated pits at the plasma membrane by regulating the chaperone activity of hsc70/auxilin.