For proper chromosome segregation, sister kinetochores must interact with microtubules from opposite spindle poles (bi-orientation). To establish bi-orientation, aberrant kinetochore–microtubule attachments are disrupted (error correction) by Aurora B kinase (Ipl1 in budding yeast). Paradoxically, during this disruption, new attachments are still formed efficiently to allow fresh attempts at bi-orientation. How this is possible remains an enigma. Here we show that kinetochore attachment to the microtubule lattice (lateral attachment) is impervious to Aurora B regulation, but attachment to the microtubule plus-end (end-on attachment) is disrupted by this kinase. Thus, a new lateral attachment is formed without interference, then converted to end-on attachment and released if incorrect. This process continues until bi-orientation is established and stabilized by tension across sister kinetochores. We reveal how Aurora B specifically promotes disruption of the end-on attachment through phospho-regulation of kinetochore components Dam1 and Ndc80. Our results reveal fundamental mechanisms for promoting error correction for bi-orientation.