Activity of the RNA ligase RtcB has only two known functions: tRNA ligation after intron removal and XBP1 mRNA ligation during activation of the unfolded protein response. Here, we show that RtcB acts in neurons to inhibit axon regeneration after nerve injury. This function of RtcB is independent of its basal activities in tRNA ligation and the unfolded protein response. Furthermore, inhibition of axon regeneration is independent of the RtcB cofactor archease. Finally, RtcB is enriched at axon termini after nerve injury. Our data indicate that neurons have co-opted an ancient RNA modification mechanism to regulate specific and dynamic functions and identify neuronal RtcB activity as a critical regulator of neuronal growth potential.