ADP-ribosylation is a post-translational modification regulating protein function in which amino acid-specific ADP-ribosyltransferases (ARTs) transfer ADP-ribose from NAD onto specific target proteins. Attachment of the bulky ADP-ribose usually inactivates the target by sterically blocking its interaction with other proteins. P2X7, an ATP-gated ion channel with important roles in inflammation and cell death, in contrast, is activated by ADP-ribosylation. Here, we report the structural basis for this gating and present the first molecular model for the activation of a target protein by ADP-ribosylation. We demonstrate that the ecto-enzyme ART2.2 ADP-ribosylates P2X7 at arginine 125 in a prominent, cysteine-rich region at the interface of 2 receptor subunits. ADP-ribose shares an adenine-ribonucleotide moiety with ATP. Our results indicate that ADP-ribosylation of R125 positions this common chemical framework to fit into the nucleotide-binding site of P2X7 and thereby gates the channel.