RNA 3′-phosphate cyclase (RtcA) catalyzes the ATP-dependent cyclization of a 3′-phosphate to form a 2′,3′-cyclic phosphate at RNA termini. Cyclization proceeds through RtcA–AMP and RNA(3′)pp(5′)A covalent intermediates, which are analogous to intermediates formed during catalysis by the tRNA ligase RtcB. Here we present a crystal structure of Pyrococcus horikoshii RtcA in complex with a 3′-phosphate terminated RNA and adenosine in the AMP-binding pocket. Our data reveal that RtcA recognizes substrate RNA by ensuring that the terminal 3′-phosphate makes a large contribution to RNA binding. Furthermore, the RNA 3′-phosphate is poised for in-line attack on the P–N bond that links the phosphorous atom of AMP to Nε of His307. Thus, we provide the first insights into RNA 3′-phosphate termini recognition and the mechanism of 3′-phosphate activation by an Rtc enzyme.