ClpB is an ATP-dependent protein disaggregation machine that is activated on demand by co-chaperones and by aggregates caused by heat shock or mutations. The regulation of ClpB's function is critical, since its persistent activation is toxic in vivo. Each ClpB molecule is composed of an auxiliary N-terminal domain (NTD), an essential regulatory middle domain (MD) that activates the machine by tilting, and two nucleotide-binding domains that are responsible for ATP-fuelled substrate threading. The NTD is generally thought to serve as a substrate-binding domain, which is commonly considered to be dispensable for ClpB's activity, and is not well-characterized structurally due to its high mobility. Here we use single-molecule FRET spectroscopy to directly monitor the real-time dynamics of ClpB's NTD and reveal its involvement in novel allosteric interactions. We find that the NTD fluctuates on a microsecond timescale and, unexpectedly, shows little change in conformational dynamics upon binding of a substrate protein. During its fast motion, the NTD makes crucial contacts with the regulatory MD, directly affecting its conformational state and thereby influencing the overall ATPase and unfolding activity of this machine. Moreover, we also show that the NTD mediates signal transduction to the nucleotide-binding domains through conserved residues. The two regulatory pathways revealed here enable the NTD to suppress the MD in the absence of protein substrate, and to limit ATPase and disaggregation activities of ClpB. The use of multiple parallel allosteric pathways involving ultrafast domain motions might be common to AAA+ molecular machines to ensure their fast and reversible activation.