FKBP-domain proteins (FKBPs) are pivotal modulators of cellular signaling, protein folding, and gene transcription. Aryl hydrocarbon receptor-interacting protein-like 1 (AIPL1) is a distinctive member of the FKBP superfamily in terms of its biochemical properties, and it plays an important biological role as a chaperone of phosphodiesterase 6 (PDE6), an effector enzyme of the visual transduction cascade. Malfunction of mutant AIPL1 proteins triggers a severe form of Leber congenital amaurosis and leads to blindness. The mechanism underlying the chaperone activity of AIPL1 is largely unknown, but involves the binding of isoprenyl groups on PDE6 to the FKBP domain of AIPL1. We solved the crystal structures of the AIPL1-FKBP domain and its pathogenic mutant V71F, both in the apo form and in complex with isoprenyl moieties. These structures reveal a module for lipid binding that is unparalleled within the FKBP superfamily. The prenyl binding is enabled by a unique "loop-out" conformation of the β4-α1 loop and a conformational "flip-out" switch of the key W72 residue. A second major conformation of apo AIPL1-FKBP was identified by NMR studies. This conformation, wherein W72 flips into the ligand-binding pocket and renders the protein incapable of prenyl binding, is supported by molecular dynamics simulations and appears to underlie the pathogenicity of the V71F mutant. Our findings offer critical insights into the mechanisms that underlie AIPL1 function in health and disease, and highlight the structural and functional diversity of the FKBPs.F KBP-domain-containing proteins (FKBPs), whose prototypic member is FKBP12, play pivotal roles in cellular signaling, protein folding, and transcription (1-4). In addition to playing these intrinsic cellular roles, FKBPs mediate the effects of the immunosuppressive drugs FK506 and rapamycin (5, 6). Binding of FK506 to FKBP12 creates an interface for calcineurin, whereas binding of rapamycin enables interaction with and inhibition of mammalian target of rapamycin; thus, FKBP12 can initiate two distinct immunosuppressive pathways (7). Many FKBPs are peptidylprolylisomerases (PPIases) that catalyze the cis-trans conversion of peptidylprolyl bonds (8). A wealth of structural information on FKBPs and their complexes with drugs has been gathered over the years. A classic FKBP domain fold is comprised of a half-conical sixstranded β-sheet surrounding a short central α-helix. Both FK506 and rapamycin bind within a prominent and highly conserved hydrophobic cavity between the β-sheet and the α-helix (5). These drugs also contact a hairpin loop of ∼20 aa that links β-strands β5 and β6 and hangs over the cavity (Fig. 1C). Surprisingly, other than the fact that this pocket contributes to the PPIase active site (9), very little is known about its physiological significance or its natural ligands. One of the few examples of such ligands is the type I TGFβ receptor, to which FKBP12 binds via its hydrophobic pocket and hairpin loop (10).Notably, one member of the FKBP family is known to play a ...