Ribonucleotides in DNA cause several types of genome instability and can be removed by ribonucleotide excision repair (RER) that is finalized by DNA ligase 1 (LIG1). However, the mechanism by which LIG1 discriminates the RER intermediate containing a 5'-RNA–DNA lesion generated by RNase H2-mediated cleavage of ribonucleotides remains unknown. Here, we determine X-ray structures of LIG1/5'-rG:C at the initial step of ligation where AMP is bound to the active site of the ligase, and uncover a large conformational change downstream the nick resulting in a shift at Arg(R)871 residue in the Adenylation domain of the ligase. Furthermore, we demonstrate a diminished ligation of the nick DNA substrate with a 5'-ribonucleotide in comparison to an efficient end joining of the nick substrate with a 3'-ribonucleotide by LIG1. Finally, our results demonstrate that mutations at the active site residues of the ligase and LIG1 disease-associated variants significantly impact the ligation efficiency of RNA–DNA heteroduplexes harboring “wrong” sugar at 3'- or 5'-end of nick. Collectively, our findings provide a novel atomic insight into proficient sugar discrimination by LIG1 during processing of the most abundant form of DNA damage in cells, genomic ribonucleotides, during initial step of the RER pathway.