Papain‐like protease (PL pro) is one of two cysteine proteases involved in the proteolytic processing of the polyproteins of Severe acute respiratory syndrome coronavirus (SARS‐CoV). PL pro also shows significant in vitro deubiquitinating and de‐ISGylating activities, although the detailed mechanism is still unclear. Here, the crystal structure of SARS‐CoV PL pro C112S mutant in complex with ubiquitin (Ub) is reported at 1.4 Å resolution. The Ub core makes mostly hydrophilic interactions with PL pro, while the Leu‐Arg‐Gly‐Gly C‐terminus of Ub is located in the catalytic cleft of PL pro, mimicking the P4–P1 residues and providing the first atomic insights into its catalysis. One of the O atoms of the C‐terminal Gly residue of Ub is located in the oxyanion hole consisting of the main‐chain amides of residues 112 and 113. Mutations of residues in the PL pro–Ub interface lead to reduced catalytic activity, confirming their importance for Ub binding and/or catalysis. The structure also revealed an N‐cyclohexyl‐2‐aminethanesulfonic acid molecule near the catalytic triad, and kinetic studies suggest that this binding site is also used by other PL pro inhibitors. Overall, the structure provides a foundation for understanding the molecular basis of coronaviral PL pro catalysis.