Atg8 is a unique ubiquitin-like protein that is covalently conjugated with a phosphatidylethanolamine through reactions similar to ubiquitination and plays essential roles in autophagy. Atg7 is the E1 enzyme for Atg8, and it activates the C-terminal Gly116 of Atg8 using ATP. Here, we report the crystal structure of Atg8 bound to the C-terminal domain of Atg7 in an unprecedented mode. Atg8 neither contacts with the central β-sheet nor binds to the catalytic site of Atg7, both of which were observed in previously reported Atg7–Atg8 structures. Instead, Atg8 binds to the C-terminal α-helix and crossover loop, thereby changing the autoinhibited conformation of the crossover loop observed in the free Atg7 structure into a short helix and a disordered loop. Mutational analyses suggested that this interaction mode is important for the activation reaction. We propose that Atg7 recognizes Atg8 through multiple steps, which would be necessary to induce a conformational change in Atg7 that is optimal for the activation reaction. Display omitted •Activation of Atg8 by Atg7 is essential for autophagy.•Structure of the form II Atg7–Atg8 complex was determined at 2.15-Å resolution.•Atg8 binding to the crossover loop releases the autoinhibited conformation of Atg7.•Atg7 transfers Atg8 from the C-terminal tail to the active site in a cis manner.•Multi-step recognition of Atg8 by Atg7 is required for the activation reaction.