The last gene in the genome of the bacteriophage HK97 encodes gp74, an HNH endonuclease. HNH motifs contain two conserved His residues and an invariant Asn residue, and they adopt a ββα structure. gp74 is essential for phage head morphogenesis, likely because gp74 enhances the specific endonuclease activity of the HK97 terminase complex. Notably, the ability of gp74 to enhance the terminase-mediated cleavage of the phage cos site requires an intact HNH motif in gp74. Mutation of H82, the conserved metal-binding His residue in the HNH motif, to Ala abrogates gp74-mediated stimulation of terminase activity. Here, we present nuclear magnetic resonance (NMR) studies demonstrating that gp74 contains an α-helical insertion in the Ω-loop, which connects the two β-strands of the ββα fold, and a disordered C-terminal tail. NMR data indicate that the Ω-loop insert makes contacts to the ββα fold and influences the ability of gp74 to bind divalent metal ions. Further, the Ω-loop insert and C-terminal tail contribute to gp74-mediated DNA digestion and to gp74 activity in phage morphogenesis. The data presented here enrich our molecular-level understanding of how HNH endonucleases enhance terminase-mediated digestion of the cos site and contribute to the phage replication cycle. IMPORTANCE This study demonstrates that residues outside the canonical ββα fold, namely, the Ω-loop α-helical insert and a disordered C-terminal tail, regulate the activity of the HNH endonuclease gp74. The increased divalent metal ion binding when the Ω-loop insert is removed compared to reduced cos site digestion and phage formation indicates that the Ω-loop insert plays multiple regulatory roles. The data presented here provide insights into the molecular basis of the involvement of HNH proteins in phage DNA packing.