Favipiravir (T-705) has been developed as a potent anti-influenza drug and exhibited a strong inhibition effect against a broad spectrum of RNA viruses. Its active form, ribofuranosyl-triphosphate (T-705-RTP), functions as a competitive substrate for the RNA-dependent RNA polymerase (RdRp) of the influenza A virus (IAV). However, the exact inhibitory mechanisms of T-705 remain elusive and subject to a long-standing debate. Although T-705 has been proposed to inhibit transcription by acting as a chain terminator, it is also paradoxically suggested to be a mutagen towards IAV RdRp by inducing mutations due to its ambiguous base pairing of C and U. Here, we combined biochemical assay with molecular dynamics (MD) simulations to elucidate the molecular mechanism underlying the inhibitory functions exerted by T-705 in IAV RdRp. Our in vitro transcription assay illustrated that IAV RdRp could recognize T-705 as a purine analogue and incorporate it into the nascent RNA strand. Incorporating a single T-705 is incapable of inhibiting transcription as extra natural nucleotides can be progressively added. However, when two consecutive T-705 are incorporated, viral transcription is completely terminated. MD simulations reveal that the sequential appearance of two T-705 in the nascent strand destabilizes the active site and disrupts the base stacking of the nascent RNA. Altogether, our results provide a plausible explanation for the inhibitory roles of T-705 targeting IAV RdRp by integrating the computational and experimental methods. Our study also offers a comprehensive platform to investigate the inhibition effect of antivirals and a novel explanation for the designing of anti-flu drugs.