Nucleation of branched actin filaments by Arp2/3 complex is tightly regulated to control actin assembly in cells. Arp2/3 complex activation involves conformational changes brought about by ATP, Nucleation Promoting Factor (NPF) proteins, actin filaments and NPF-recruited actin monomers. To understand how these factors promote activation, we must first understand how the complex is held inactive in their absence. Here we demonstrate that the Arp3 C-terminal tail is a structural switch that prevents Arp2/3 complex from adopting an active conformation. The interaction between the tail and a hydrophobic groove in Arp3 blocks movement of Arp2 and Arp3 into an activated filament-like (short pitch) conformation. Our data indicate ATP binding destabilizes this interaction via an allosteric link between the Arp3 nucleotide cleft and the hydrophobic groove, thereby promoting the short-pitch conformation. Our results help explain how Arp2/3 complex is locked in an inactive state without activators and how autoinhibition is relieved.