The ESCRT protein complexes are recruited from the cytoplasm and assemble on the endosomal membrane into a protein network that functions in sorting of ubiquitinated transmembrane proteins into the multivesicular body (MVB) pathway. This transport pathway packages cargo proteins into vesicles that bud from the MVB limiting membrane into the lumen of the compartment and delivers these vesicles to the lysosome/vacuole for degradation. The dissociation of ESCRT machinery by the AAA-type ATPase Vps4 is a necessary late step in the formation of MVB vesicles. This ATP-consuming step is regulated by several Vps4-interacting proteins, including the newly identified regulator Ist1. Our data suggest that Ist1 has a dual role in the regulation of Vps4 activity: it localizes to the ESCRT machinery via Did2 where it positively regulates recruitment of Vps4 and it negatively regulates Vps4 by forming an Ist1-Vps4 heterodimer, in which Vps4 cannot bind to the ESCRT machinery. The activity of the MVB pathway might be in part determined by outcome of these two competing activities.