Gram-negative bacteria are surrounded by an outer membrane composed of phospholipids and lipopolysaccharide (LPS), which acts as a barrier to the environment and contributes to antibiotic resistance. While mechanisms of LPS transport have been well characterised, systems that translocate phospholipids across the periplasm, such as MCE (Mammalian Cell Entry) transport systems, are less well understood. Here we show that E. coli MCE protein LetB (formerly YebT), forms a ∼0.6 megadalton complex in the periplasm. Our cryo-EM structure reveals that LetB consists of a stack of seven modular rings, creating a long hydrophobic tunnel through the centre of the complex. LetB is sufficiently large to span the gap between the inner and outer membranes, and mutations that shorten the tunnel abolish function. Lipids bind inside the tunnel, suggesting that it functions as a pathway for lipid transport. Cryo-EM structures in the open and closed states reveal a dynamic tunnel lining, with implications for gating or substrate translocation. Together, our results support a model in which LetB establishes a physical link between the bacterial inner and outer membranes, and creates a hydrophobic pathway for the translocation of lipids across the periplasm, to maintain the integrity of the outer membrane permeability barrier.