Lassa virus, which causes annual outbreaks in West Africa with increasing case numbers in recent years, is recognized by the WHO R&D blueprint as a significant threat for public health with high epidemic potential and no effective countermeasures. The viral large (L) protein, which contains the RNA-dependent RNA polymerase, is a key player for transcription of viral mRNA and genome replication. Here we present nine cryo-EM structures of Lassa virus L protein in the apo-, promoter-bound pre-initiation and active RNA synthesis states. We characterize distinct binding pockets for the conserved genomic 3’ and 5’ promoter RNAs and show how full-promoter binding induces a distinct pre-initiation conformation. In the apo- and elongation states, the endonuclease is inhibited by the binding of two distinct L protein peptides in the active site, respectively, whereas in the pre-initiation state, the endonuclease is uninhibited. In the stalled, early elongation state, a template- product duplex is bound in the active site cavity together with an incoming non-hydrolysable nucleotide. In this configuration, the full C-terminal region of the L protein, including the putative cap-binding domain, is highly ordered. The structural data are complemented by in vitro and cell-based studies testing a broad range of L protein mutants to probe functional relevance. These data advance our mechanistic understanding of how this flexible and multifunctional molecular machine is activated and will underpin antiviral drug development targeting the arenavirus L protein.