Context. High-resolution X-ray observations in the imaging and spectral domain have recently opened a new window on active galactic nuclei (AGN) feedback onto the circumnuclear gas. Spectral diagnostics, as well as the remarkable morphological coincidence between [O iii] and X-rays, point to AGN photoionisation as the dominant ionisation mechanism on scales as large as a few kpc.Aims. In this paper we extend these studies to the nearby Seyfert 2 galaxy NGC 1365, known to host a circumnuclear ring of intense star formation at 1.3 kpc from the nucleus. The main scope of this investigation is to study the connection between nuclear activity and star formation in nearby AGN. Methods. We present a deep ( 5.8 days) 0.3-2 keV high-resolution spectrum of NGC 1365, collected with the reflection grating spectrometer (RGS) on board XMM-Newton. Results. The spectrum is dominated by strong recombination lines of He-and H-like transitions from carbon to silicon, as well as by L transitions from Fexvii. The continuum is strong, especially in the 10 to 20 Å range. Formal fits require two optically thin, collisionally ionised plasma components, with temperatures 300 and 640 eV. However, they leave the bulk of the forbidden components of the He-α Ovii and Nvi triplets unaccounted for. These features can be explained as being produced by photoionised gas. NGC 1365 is therefore the first obscured AGN, whose high-resolution X-ray spectrum requires both collisional ionisation and photoionisation. Conclusions. The relative weakness of photoionisation does not stem from the intrinsic weakness of its AGN, whose X-ray luminosity is ∼ > 10 42 erg s −1 . We suggest that it may instead come from the line-of-sight from the active nucleus to the NLR being blocked by optically thick matter in the broad line region, at the same time responsible for the large observed variation of the column density obscuring the X-ray active nucleus. Alternatively, NGC 1365 could host a remarkably luminous nuclear starburst when compared to the AGN accretion power.