The assembly of lipopolysaccharide (LPS) on the surface of Gram-negative bacterial cells is essential for their viability and is achieved by the seven-protein LPS transport (Lpt) pathway. The outer membrane (OM) lipoprotein LptE and the β-barrel membrane protein LptD form a complex that assembles LPS into the outer leaflet of the OM. We report a crystal structure of the Escherichia coli OM lipoprotein LptE at 2.34 Å. The structure reveals homology to eukaryotic LPS-binding proteins and allowed for the prediction of an LPS-binding site, which was confirmed by genetic and biophysical experiments. Specific point mutations at this site lead to defects in OM biogenesis. We show that wild-type LptE disrupts LPS-LPS interactions in vitro and that these mutations decrease the ability of LptE to disaggregate LPS. Transmission electron microscopic imaging shows that LptE can disrupt LPS aggregates even at substoichiometric concentrations. We propose a model in which LptE functions as an LPS transfer protein in the OM translocon by disaggregating LPS during transport to allow for its insertion into the OM.