Outer membrane-specific lipoproteins of Escherichia coli are released from the inner membrane through the action of Lol-CDE, which leads to the formation of a complex between the lipoprotein and LolA, a periplasmic chaperone. LolA then transfers lipoproteins to LolB, a receptor in the outer membrane. The structures of LolA and LolB are very similar, having an incomplete beta-barrel covered with an alpha-helical lid forming a hydrophobic cavity inside. The cavity of LolA, but not that of LolB, is closed and thus inaccessible to the bulk solvent. Previous studies suggested that Arg at position 43 of LolA is critical for maintaining this closed structure. We show here, through a crystallographic study, that the cavity of the LolA(R43L) mutant, in which Leu replaces Arg-43, is indeed open to the external milieu. We then found that the binding of a fluorescence probe distinguishes the open/close state of the cavity. Furthermore, it was revealed that the hydrophobic cavity of LolA opens upon the binding of lipoproteins. Such a liganded LolA was found to be inactive in the release of lipoproteins from the inner membrane. On the other hand, the liganded LolA became fully functional when lipoproteins were removed from LolA by detergent treatment or transferred to LolB. Free LolA thus formed was inaccessible to a fluorescence probe. These results, taken together, reveal the LolA cycle, in which the hydrophobic cavity undergoes opening and closing upon the binding and release of lipoproteins, respectively.