Cytoplasmic dynein is activated by cargo adapters, dynactin, and LIS1. However, it is unclear whether there are additional regulations for coordinating cargo binding and dynein activation. Here we found that a dynein AAA4 arginine-finger mutation in Aspergillus nidulans bypasses the requirement of LIS1 for dynein activation driven by the early endosomal adapter HookA. As AAA4 arginine-finger is implicated in AAA3 ATP hydrolysis, we examined AAA3 mutants defective in ATP binding and hydrolysis respectively. Astonishingly, blocking AAA3 ATP hydrolysis allows dynein activation by dynactin without LIS1 or HookA. As a consequence, dynein accumulates at microtubule minus ends while early endosomes stay near the plus ends. Blocking AAA3 ATP binding abnormally stabilizes the dynein-LIS1 interaction, suggesting that ATP binding at AAA3 regulates the dynamic dynein-LIS1 interaction. Thus, the AAA3 ATPase cycle not only regulates the mechanochemical cycle of dynein but also regulates the dynein-LIS1 interaction and the coordination between dynein activation and cargo binding.