SAMHD1 is a post-entry cellular restriction factor that inhibits HIV-1 replication in myeloid-lineage and resting CD4+ T cells. The mechanism of SAMHD1 restriction has been disputed but the predominant theory is that SAMHD1 dNTP triphosphohydrolase activity blocks HIV-1 infection by reducing the cellular dNTP pool to a level that does not support viral reverse transcription. A large body of structural and biochemical studies have demonstrated that the active form of SAMHD1 is a protein tetramer that contains four regulatory allosteric sites each accommodating a deoxynucleotide/nucleotide pair and four active sites that hydrolyse the dNTP substrates. In addition, other studies have shown that the dNTP triphosphohydrolysis reaction is regulated by tetramer stability, controlled by SAMHD1 phosphorylation at residue T592. However, although, this wealth of information has contributed significantly to our understanding of SAMHD1 restriction, regulation and activation the exact nature of SAMHD1 cellular activity that restricts HIV-1 and the molecular details catalytic mechanism of dNTP hydrolysis have remained unclear. Therefore, to elucidate the molecular mechanism of dNTP triphospho-hydrolysis by SAMHD1, we have undertaken virological studies together with comprehensive, enzymological studies employing deoxynucleotide substrate and activator analogues and determined crystal structures of catalytically active SAMHD1 with dNTP-mimicking, competitive inhibitors. The SAMHD1-inhibitor co-crystal structures show in atomic detail how dNTP substrates are coordinated at the SAMHD1 active site and reveal how the activated protein cleaves the phospho-ester bond in the dNTP substrate. In conclusion, these studies now clarify the anti-HIV-1 activity of SAMHD1 and provide the molecular details of the SAMHD1 reaction mechanism demonstrating how dNTP substrates are hydrolysed and enable more accurate prediction of whether new and existing antiviral and anticancer drugs are hydrolysed by SAMHD1.