Significance The EHD2 protein controls the association of membrane pits termed caveolae to cell surfaces. Caveolae are implicated in muscle, pulmonary, and lipid disorders. We establish functionally, and structurally, how EHD2 cycles between an active, membrane-bound state and an inactive state in solution. We present an approach to resolve the structure of proteins in their membrane-bound state, which is difficult to obtain otherwise. A dramatic conformational change of EHD2 upon membrane binding is demonstrated. ATP binding is required for partial membrane insertion and subsequent oligomerization. In solution, internal regulatory regions inhibit the conformational change. This stringently regulated mechanistic cycle might be prototypical for a large family of proteins involved in membrane fission and may open avenues to control the process in vivo.