The sequential action of five distinct endosomal-sorting complex required for transport (ESCRT) complexes is required for the lysosomal downregulation of cell surface receptors through the multivesicular body (MVB) pathway. On endosomes, the assembly of ESCRT-III is a highly ordered process. We show that the length of ESCRT-III (Snf7) oligomers controls the size of MVB vesicles and addresses how ESCRT-II regulates ESCRT-III assembly. The first step of ESCRT-III assembly is mediated by Vps20, which nucleates Snf7/Vps32 oligomerization, and serves as the link to ESCRT-II. The ESCRT-II subunit Vps25 induces an essential conformational switch that converts inactive monomeric Vps20 into the active nucleator for Snf7 oligomerization. Each ESCRT-II complex contains two Vps25 molecules (arms) that generate a characteristic Y-shaped structure. Mutant 'one-armed' ESCRT-II complexes with a single Vps25 arm are sufficient to nucleate Snf7 oligomerization. However, these oligomers cannot execute ESCRT-III function. Both Vps25 arms provide essential geometry for the assembly of a functional ESCRT-III complex. We propose that ESCRT-II serves as a scaffold that nucleates the assembly of two Snf7 oligomers, which together are required for cargo sequestration and vesicle formation during MVB sorting.