Tol-Pal is a multiprotein system present in the envelope of Gram-negative bacteria. Inactivation of this widely conserved machinery compromises the outer membrane (OM) layer of these organisms, resulting in hypersensitivity to many antibiotics. Mutants in thetol-pallocus fail to complete division and form cell chains. This phenotype along with the localization of Tol-Pal components to the cytokinetic ring inEscherichia colihas led to the proposal that the primary function of the system is to promote OM constriction during division. Accordingly, a poorly constricted OM is believed to link the cell chains formed upon Tol-Pal inactivation. However, we show here that cell chains ofE. coli tol-palmutants are connected by an incompletely processed peptidoglycan (PG) layer. Genetic suppressors of this defect were isolated and found to overproduce OM lipoproteins capable of cleaving the glycan strands of PG. Among the factors promoting cell separation in mutant cells was a protein of previously unknown function (YddW), which we have identified as a divisome-localized glycosyl hydrolase that cleaves peptide-free PG glycans. Overall, our results indicate that the cell chaining defect of Tol-Pal mutants cannot simply be interpreted as a defect in OM constriction. Rather, the complex also appears to be required for the activity of several OM-localized enzymes with cell wall remodeling activity. Thus, the Tol-Pal system may play a more general role in coordinating OM invagination with PG remodeling at the division site than previously appreciated.