During endoplasmic-reticulum-associated protein degradation (ERAD), misfolded proteins are polyubiquitinated, extracted from the ER membrane and degraded by the proteasome1-4. In a process called retrotranslocation, misfolded luminal proteins first need to traverse the ER membrane before ubiquitination can occur in the cytosol. It was suggested that the membrane-embedded ubiquitin ligase Hrd1 forms a retrotranslocation pore regulated by cycles of auto- and deubiquitination5-8. However, the mechanism by which auto-ubiquitination affects Hrd1 and allows polypeptides to cross the membrane and whether Hrd1 forms a membrane-spanning pore remained unknown. Here, using purified Hrd1 incorporated into different model membranes, we show that Hrd1 auto-ubiquitination leads to the opening of a pore. Substrate binding increases the pore size and its activity, whereas deubiquitination closes the pore and renders it unresponsive to substrate. We identify two binding sites for misfolded proteins in Hrd1, a low-affinity luminal site and a high-affinity cytoplasmic site formed following auto-ubiquitination of specific lysine residues in Hrd1's RING domain. We propose that the affinity difference between the luminal and cytoplasmic binding sites provides the initial driving force for substrate movement through Hrd1.