Upon induction of autophagy, the ubiquitin-like protein LC3 is conjugated to phosphatidylethanolamine (PE) on the inner and outer membrane of autophagosomes to allow cargo selection and autophagosome formation. LC3 undergoes two processing steps, the proteolytic cleavage of pro-LC3 and the de-lipidation of LC3-PE from autophagosomes, both executed by the same cysteine protease ATG4. How ATG4 activity is regulated to co-ordinate these events is currently unknown. Here we find that ULK1, a protein kinase activated at the autophagosome formation site, phosphorylates human ATG4B on serine 316. Phosphorylation at this residue results in inhibition of its catalytic activity in vitro and in vivo. On the other hand, phosphatase PP2A-PP2R3B can remove this inhibitory phosphorylation. We propose that the opposing activities of ULK1-mediated phosphorylation and PP2A-mediated dephosphorylation provide a phospho-switch that regulates the cellular activity of ATG4B to control LC3 processing.Upon autophagy induction, LC3 is cleaved by the protease ATG4 and conjugated to the autophagosomal membrane; however, its removal is mediated by the same protease. Here the authors show that ULK1-mediated phosphorylation and PP2A-mediated dephosphorylation of ATG4 regulates its cellular activity to control LC3 processing.