Baloxavir marboxil (BXM) is an FDA-approved antiviral prodrug for the treatment of influenza A and B infection and post-exposure prophylaxis. The active form, baloxavir acid (BXA), targets the cap-snatching endonuclease (PA) of the influenza virus polymerase complex. The nuclease activity delivers the primer for transcription and previous reports have shown that BXA blocks the nuclease activity with high potency. However, biochemical studies on the mechanism of action are lacking. Structural data have shown that BXA chelates the two divalent metal ions at the active site, like inhibitors of the human immunodeficiency virus type 1 (HIV-1) integrase or ribonuclease (RNase) H. Here we studied the mechanisms underlying the high potency of BXA and how the I38T mutation confers resistance to the drug. Enzyme kinetics with the recombinant heterotrimeric enzyme (FluB-ht) revealed characteristics of a tight binding inhibitor. The apparent inhibitor constant (K) is 12 nM, while the I38T mutation increased K by ～18-fold. Order-of-addition experiments show that a preformed complex of FluB-ht, Mg ions and BXA is required to observe inhibition, which is consistent with active site binding. Conversely, a preformed complex of FluB-ht and RNA substrate prevents BXA from accessing the active site. Unlike integrase inhibitors that interact with the DNA substrate, BXA behaves like RNase H inhibitors that compete with the nucleic acid at the active site. The collective data support the conclusion that BXA is a tight binding inhibitor and the I38T mutation diminishes these properties.