The linear ubiquitin chain assembly complex (LUBAC) is a RING E3 ligase that regulates immune and inflammatory signalling pathways. Unlike classical RING E3 ligases, LUBAC determines the type of ubiquitin chain being formed, an activity normally associated with the E2 enzyme. We show that the RING-in-between-RING (RBR)-containing region of HOIP--the catalytic subunit of LUBAC--is sufficient to generate linear ubiquitin chains. However, this activity is inhibited by the N-terminal portion of the molecule, an inhibition that is released upon complex formation with HOIL-1L or SHARPIN. Furthermore, we demonstrate that HOIP transfers ubiquitin to the substrate through a thioester intermediate formed by a conserved cysteine in the RING2 domain, supporting the notion that RBR ligases act as RING/HECT hybrids.