A unique feature of coronaviruses is their utilization of self-encoded nonstructural protein 16 (nsp16), 2′-O-methyltransferase (2′-O-MTase), to cap their RNAs through ribose 2′-O-methylation modification. This process is crucial for maintaining viral genome stability, facilitating efficient translation, and enabling immune escape. Despite considerable advances in the ultrastructure of SARS-CoV-2 nsp16/nsp10, insights into its molecular mechanism have so far been limited. In this study, we systematically characterized the 2′-O-MTase activity of nsp16 in SARS-CoV-2, focusing on its dependence on nsp10 stimulation. We observed cross-reactivity between nsp16 and nsp10 in various coronaviruses due to a conserved interaction interface. However, a single residue substitution (K58T) in SARS-CoV-2 nsp10 restricted the functional activation of MERS-CoV nsp16. Furthermore, the cofactor nsp10 effectively enhanced the binding of nsp16 to the substrate RNA and the methyl donor S-adenosyl-l-methionine (SAM). Mechanistically, His-80, Lys-93, and Gly-94 of nsp10 interacted with Asp-102, Ser-105, and Asp-106 of nsp16, respectively, thereby effectively stabilizing the SAM binding pocket. Lys-43 of nsp10 interacted with Lys-38 and Gly-39 of nsp16 to dynamically regulate the RNA binding pocket and facilitate precise binding of RNA to the nsp16/nsp10 complex. By assessing the conformational epitopes of nsp16/nsp10 complex, we further determined the critical residues involved in 2′-O-MTase activity. Additionally, we utilized an in vitro biochemical platform to screen potential inhibitors targeting 2′-O-MTase activity. Overall, our results significantly enhance the understanding of viral 2′-O methylation process and mechanism, providing valuable targets for antiviral drug development.