Although interferon-induced proteins with tetratricopeptide repeats (IFIT proteins) inhibit infection of many viruses by recognizing their RNA, the regulatory mechanisms involved remain unclear. Here we report a crystal structure of cap 0 (m⁷GpppN) RNA bound to human IFIT1 in complex with the C-terminal domain of human IFIT3. Structural, biochemical, and genetic studies suggest that IFIT3 binding to IFIT1 has dual regulatory functions: (1) extending the half-life of IFIT1 and thereby increasing its steady-state amounts in cells; and (2) allosterically regulating the IFIT1 RNA-binding channel, thereby enhancing the specificity of recognition for cap 0 but not cap 1 (m⁷GpppNm) or 5′-ppp RNA. Mouse Ifit3 lacks this key C-terminal domain and does not bind mouse Ifit1. The IFIT3 interaction with IFIT1 is important for restricting infection of viruses lacking 2′-O methylation in their RNA cap structures. Our experiments establish differences in the regulation of IFIT1 orthologs and define targets for modulation of human IFIT protein activity.