Two ubiquitin-like molecules, Atg12 and LC3/Atg8, are involved in autophagosome biogenesis. Atg12 is conjugated to Atg5 and forms an ∼800-kDa protein complex with Atg16L (referred to as Atg16L complex). LC3/Atg8 is conjugated to phosphatidylethanolamine and is associated with autophagosome formation, perhaps by enabling membrane elongation. Although the Atg16L complex is required for efficient LC3 lipidation, its role is unknown. Here, we show that overexpression of Atg12 or Atg16L inhibits autophagosome formation. Mechanistically, the site of LC3 lipidation is determined by the membrane localization of the Atg16L complex as well as the interaction of Atg12 with Atg3, the E2 enzyme for the LC3 lipidation process. Forced localization of Atg16L to the plasma membrane enabled ectopic LC3 lipidation at that site. We propose that the Atg16L complex is a new type of E3-like enzyme that functions as a scaffold for LC3 lipidation by dynamically localizing to the putative source membranes for autophagosome formation.