F1-ATPase forms the membrane-associated segment of F0F1-ATP synthase — the fundamental enzyme complex in cellular bioenergetics for ATP hydrolysis and synthesis. Here, we report a crystal structure of the central F1 subcomplex, consisting of the rotary shaft γ subunit and the inhibitory ε subunit, from the photosynthetic cyanobacterium Thermosynechococcus elongatus BP-1, at 1.98 Å resolution. In contrast with their homologous bacterial and mitochondrial counterparts, the γ subunits of photosynthetic organisms harbour a unique insertion of 35–40 amino acids. Our structural data reveal that this region forms a β-hairpin structure along the central stalk. We identified numerous critical hydrogen bonds and electrostatic interactions between residues in the hairpin and the rest of the γ subunit. To elaborate the critical function of this β-hairpin in inhibiting ATP hydrolysis, the corresponding domain was deleted in the cyanobacterial F1 subcomplex. Biochemical analyses of the corresponding α3β3γ complex confirm that the clinch of the hairpin structure plays a critical role and accounts for a significant interaction in the α3β3 complex to induce ADP inhibition during ATP hydrolysis. In addition, we found that truncating the β-hairpin insertion structure resulted in a marked impairment of the interaction with the ε subunit, which binds to the opposite side of the γ subunit from the β-hairpin structure. Combined with structural analyses, our work provides experimental evidence supporting the molecular principle of how the insertion region of the γ subunit suppresses F1 rotation during ATP hydrolysis.