The endosomal sorting complex ESCRT-III, which is formed by the structurally related CHMP proteins, is engaged by HIV-1 to promote viral budding. Here we show that progressive truncations into the C-terminal acidic domains of CHMP proteins trigger an increasingly robust anti-HIV budding activity. Together with biochemical evidence for specific intramolecular interactions between the basic and acidic halves of CHMP3 and CHMP4B, these results suggest that the acidic domains are autoinhibitory. The acidic half of CHMP3 also interacts with the endosome-associated ubiquitin isopeptidase AMSH, and the coexpression of AMSH or its CHMP3-binding domain converts wild-type CHMP3 into a potent inhibitor of HIV-1 release. Point mutations in CHMP3 that prevent binding to AMSH abrogate this effect, suggesting that binding to AMSH relieves the autoinhibition of CHMP3. Collectively, our results indicate that CHMP proteins are regulated through an autoinhibitory switch mechanism that allows tight control of ESCRT-III assembly.