SARS-CoV-2 is the cause of the ongoing Coronavirus disease 19 (COVID-19) pandemic around the world causing pneumonia and lower respiratory tract infections. In understanding the SARS-CoV-2 pathogenicity and mechanism of action, it is essential to depict the full repertoire of expressed viral proteins. The recent biological studies have highlighted the leader protein Nsp1 of SARS-CoV-2 importance in shutting down the host protein production. Besides, it still enigmatic how Nsp1 regulates for translation. Here we report the novel structure of Nsp1 from SARS-CoV-2 in complex with the SL1 region of 5'UTR of SARS-CoV-2, and its factual interaction is corroborated with enzyme kinetics and experimental binding affinity studies. The studies also address how leader protein Nsp1 of SARS-CoV-2 recognizes its self RNA toward translational regulation by further recruitment of the 40S ribosome. With the aid of molecular dynamics and simulations, we also demonstrated the real-time stability and functional dynamics of the Nsp1/SL1 complex. The studies also report the potential inhibitors and their mode of action to block viral protein/RNA complex formation. This enhance our understanding of the mechanism of the first viral protein Nsp1 synthesized in the human cell to regulate the translation of self and host. Understanding the structure and mechanism of SARS-CoV-2 Nsp1 and its interplay with the viral RNA and ribosome will open the arena for exploring the development of live attenuated vaccines and effective therapeutic targets for this disease.