In the process of autophagy, a ubiquitin-like molecule, LC3/Atg8, is conjugated to phosphatidylethanolamine (PE) and associates with forming autophagosomes. In mammalian cells, the existence of multiple Atg8 homologues (referred to as LC3 paralogues) has hampered genetic analysis of the lipidation of LC3 paralogues. Here, we show that overexpression of an inactive mutant of Atg4B, a protease that processes pro-LC3 paralogues, inhibits autophagic degradation and lipidation of LC3 paralogues. Inhibition was caused by sequestration of free LC3 paralogues in stable complexes with the Atg4B mutant. In mutant overexpressing cells, Atg5- and ULK1-positive intermediate autophagic structures accumulated. The length of these membrane structures was comparable to that in control cells; however, a significant number were not closed. These results show that the lipidation of LC3 paralogues is involved in the completion of autophagosome formation in mammalian cells. This study also provides a powerful tool for a wide variety of studies of autophagy in the future.