Dynein is a microtubule motor that transports many different cargos in various cell types and contexts. How dynein is regulated to perform these activities with spatial and temporal precision remains unclear. Human dynein is regulated by autoinhibition, whereby intermolecular contacts limit motor activity. Whether this mechanism is conserved throughout evolution, whether it can be affected by extrinsic factors, and its role in regulating dynein function remain unclear. Here, we use a combination of negative stain electron microscopy, single-molecule assays, genetic, and cell biological techniques to show that autoinhibition is conserved in budding yeast, and plays a key role in coordinating in vivo dynein function. Moreover, we find that the Lissencephaly-related protein, LIS1 (Pac1 in yeast), plays an important role in regulating dynein autoinhibition. Our studies demonstrate that, rather than inhibiting dynein motility, Pac1/LIS1 promotes dynein activity by stabilizing the uninhibited conformation, which ensures appropriate dynein localization and activity in cells.