The β-barrel assembly machine (Bam) complex folds and inserts integral membrane proteins into the outer membrane of Gram-negative bacteria. The two essential components of the complex, BamA and BamD, both interact with substrates, but how the two coordinate with each other during assembly is not clear. To elucidate aspects of this process we slowed the assembly of an essential β-barrel substrate of the Bam complex, LptD, by changing a conserved residue near the C terminus. This defective substrate is recruited to the Bam complex via BamD but is unable to integrate into the membrane efficiently. Changes in the extracellular loops of BamA partially restore assembly kinetics, implying that BamA fails to engage this defective substrate. We conclude that substrate binding to BamD activates BamA by regulating extracellular loop interactions for folding and membrane integration.