The influenza virus polymerase, a heterotrimer composed of three subunits, PA, PB1 and PB2, is responsible for replication and transcription of the eight separate segments of the viral RNA genome in the nuclei of infected cells. The polymerase synthesizes viral messenger RNAs using short capped primers derived from cellular transcripts by a unique 'cap-snatching' mechanism. The PB2 subunit binds the 5' cap of host pre-mRNAs, which are subsequently cleaved after 10-13 nucleotides by the viral endonuclease, hitherto thought to reside in the PB2 (ref. 5) or PB1 (ref. 2) subunits. Here we describe biochemical and structural studies showing that the amino-terminal 209 residues of the PA subunit contain the endonuclease active site. We show that this domain has intrinsic RNA and DNA endonuclease activity that is strongly activated by manganese ions, matching observations reported for the endonuclease activity of the intact trimeric polymerase. Furthermore, this activity is inhibited by 2,4-dioxo-4-phenylbutanoic acid, a known inhibitor of the influenza endonuclease. The crystal structure of the domain reveals a structural core closely resembling resolvases and type II restriction endonucleases. The active site comprises a histidine and a cluster of three acidic residues, conserved in all influenza viruses, which bind two manganese ions in a configuration similar to other two-metal-dependent endonucleases. Two active site residues have previously been shown to specifically eliminate the polymerase endonuclease activity when mutated. These results will facilitate the optimisation of endonuclease inhibitors as potential new anti-influenza drugs.