Arenaviridae synthesize viral mRNAs using short capped primers presumably acquired from cellular transcripts by a 'cap-snatching' mechanism. Here, we report the crystal structure and functional characterization of the N-terminal 196 residues (NL1) of the L protein from the prototypic arenavirus: lymphocytic choriomeningitis virus. The NL1 domain is able to bind and cleave RNA. The 2.13 Å resolution crystal structure of NL1 reveals a type II endonuclease α/β architecture similar to the N-terminal end of the influenza virus PA protein. Superimposition of both structures, mutagenesis and reverse genetics studies reveal a unique spatial arrangement of key active site residues related to the PD…(D/E)XK type II endonuclease signature sequence. We show that this endonuclease domain is conserved and active across the virus families Arenaviridae, Bunyaviridae and Orthomyxoviridae and propose that the arenavirus NL1 domain is the Arenaviridae cap-snatching endonuclease.