The genome packaging reactions of tailed bacteriophages and herpes viruses require the activity of a terminase enzyme, which is comprised of large and small subunits. Phage genomes are replicated as linear concatemers composed of multiple copies of the genome joined end to end. As the terminase enzyme packages the genome into the phage capsid, it cleaves the DNA into single genome-length units. In this work, we show that the phage HK97 HNH protein, gp74, is required for the specific endonuclease activity of HK97 terminase and is essential for phage head morphogenesis. HNH proteins are a very common family of proteins generally associated with nuclease activity that are found in all kingdoms of life. We show that the activity of gp74 in terminase-mediated cleavage of the phage cos site relies on the presence of an HNH motif active-site residue, and that the large subunit of HK97 terminase physically interacts with gp74. Bioinformatic analysis reveals that the role of HNH proteins in terminase function is widespread among long-tailed phages and is uniquely required for the activity of the Terminase_1 family of large terminase proteins.