Formation of the autophagosome is likely the most complex step of macroautophagy, and indeed it is the morphological and functional hallmark of this process; accordingly, it is critical to understand the corresponding molecular mechanism. Atg8 is the only known autophagy-related (Atg) protein required for autophagosome formation that remains associated with the completed sequestering vesicle. Approximately one-fourth of all of the characterized Atg proteins that participate in autophagosome biogenesis affect Atg8, regulating its conjugation to phosphatidylethanolamine (PE), localization to the phagophore assembly site and/or subsequent deconjugation. An unanswered question in the field regards the physiological role of the deconjugation of Atg8-PE. Using an Atg8 mutant that bypasses the initial Atg4-dependent processing, we demonstrate that Atg8 deconjugation is an important step required to facilitate multiple events during macroautophagy. The inability to deconjugate Atg8-PE results in the mislocalization of this protein to the vacuolar membrane. We also show that the deconjugation of Atg8-PE is required for efficient autophagosome biogenesis, the assembly of Atg9-containing tubulovesicular clusters into phagophores/autophagosomes, and for the disassembly of PAS-associated Atg components.