Mechanisms governing a neuron's regenerative ability are important but not well understood. We identify Rtca (RNA 3'-terminal phosphate cyclase) as an inhibitor of axon regeneration. Removal of Rtca cell-autonomously enhanced axon regrowth in the Drosophila CNS, whereas its overexpression reduced axon regeneration in the periphery. Rtca along with the RNA ligase Rtcb and its catalyst Archease operate in the RNA repair and splicing pathway important for stress-induced mRNA splicing, including that of Xbp1, a cellular stress sensor. Drosophila Rtca and Archease had opposing effects on Xbp1 splicing, and deficiency of Archease or Xbp1 impeded axon regeneration in Drosophila. Moreover, overexpressing mammalian Rtca in cultured rodent neurons reduced axonal complexity in vitro, whereas reducing its function promoted retinal ganglion cell axon regeneration after optic nerve crush in mice. Our study thus links axon regeneration to cellular stress and RNA metabolism, revealing new potential therapeutic targets for treating nervous system trauma.