Ubiquitin-like modifier involved in cytoplasm to vacuole transport (Cvt) vesicles and autophagosomes formation. With ATG4, mediates the delivery of the vesicles and autophagosomes to the vacuole via the microtubule cytoskeleton. Required for selective autophagic degradation of the nucleus (nucleophagy) as well as for mitophagy which contributes to regulate mitochondrial quantity and quality by eliminating the mitochondria to a basal level to fulfill cellular energy requirements and preventing excess ROS production. Participates also in membrane fusion events that take place in the early secretory pathway. Also involved in endoplasmic reticulum-specific autophagic process and is essential for the survival of cells subjected to severe ER stress. The ATG8-PE conjugate mediates tethering between adjacent membranes and stimulates membrane hemifusion, leading to expansion of the autophagosomal membrane during autophagy. Moreover not only conjugation, but also subsequent ATG8-PE deconjugation is an important step required to facilitate multiple events during macroautophagy, and especially for efficient autophagosome biogenesis, the assembly of ATG9-containing tubulovesicular clusters into phagophores/autophagosomes, and for the disassembly of PAS-associated ATG components. Also plays a role in regulation of filamentous growth. Conjugation to phosphatidylethanolamine (PE) leads to homodimerization. Interacts with ATG1, ATG3, ATG4, ATG7, ATG12, ATG32, ATG34 and the C-terminal 10 residues domain of ATG19. Interacts also with the endoplasmic reticulum to Golgi v-SNARE protein BET1 and the vacuolar v-SNARE protein NYV1. Interacts with the UBX domain-containing protein SHP1. Membrane-associated through a lipid anchor. This association needs the 2 ubiquitin-like systems required for cytoplasm to vacuole transport and autophagy. ATG18 and ATG21 facilitate the recruitment of ATG8-PE to the site of autophagosome formation and protect it from premature cleavage by ATG4. Localizes to both the isolation membrane (IM) and the vacuole-isolation membrane contact site (VICS) during IM expansion. The IM is a membrane sac generated from the pre-autophagosomal structure that ultimately expands to become a mature autophagosome. Upon starvation, is also recruited to into unique membrane structures near SEC13-containing ER exit sites which lack components of the Golgi apparatus and the endosomes, and which were called a compartments for unconventional protein secretion (CUPS). The C-terminal Arg-117 residue of ATG8 is removed by ATG4 to expose Gly-116 at the C-terminus. This Gly-116 forms then a thioester bond with the 'Cys-507' of ATG7 (E1-like activating enzyme) before being transferred to the 'Cys-234' of ATG3 (the specific E2 conjugating enzyme), in order to be finally amidated with phosphatidylethanolamine. This lipid modification anchors ATG8 to membranes and can be reversed by ATG4, releasing soluble ATG8. Belongs to the ATG8 family.