The CRISPR-Cas type III-E RNA-targeting effector complex gRAMP/Cas7-11 is associated with a caspase-like protein (TPR-CHAT/Csx29) to form Craspase (CRISPR-guided caspase). Here, we use cryo-electron microscopy snapshots of Craspase to explain its target RNA cleavage and protease activation mechanisms. Target-guide pairing extending into the 5' region of the guide RNA displaces a gating loop in gRAMP, which triggers an extensive conformational relay that allosterically aligns the protease catalytic dyad and opens an amino acid side-chain-binding pocket. We further define Csx30 as the endogenous protein substrate that is site-specifically proteolyzed by RNA-activated Craspase. This protease activity is switched off by target RNA cleavage by gRAMP and is not activated by RNA targets containing a matching protospacer flanking sequence. We thus conclude that Craspase is a target RNA-activated protease with self-regulatory capacity.