The biogenesis of autophagosomes depends on the conjugation of Atg8-like proteins with phosphatidylethanolamine. Atg8 processing by the cysteine protease Atg4 is required for its covalent linkage to phosphatidylethanolamine, but it is also necessary for Atg8 deconjugation from this lipid to release it from membranes. How these two cleavage steps are coordinated is unknown. Here we show that phosphorylation by Atg1 inhibits Atg4 function, an event that appears to exclusively occur at the site of autophagosome biogenesis. These results are consistent with a model where the Atg8-phosphatidylethanolamine pool essential for autophagosome formation is protected at least in part by Atg4 phosphorylation by Atg1 while newly synthesized cytoplasmic Atg8 remains susceptible to constitutive Atg4 processing.