The potent antiretroviral protein APOBEC3G (A3G) specifically targets and deaminates deoxycytidine nucleotides, generating deoxyuridine, in single stranded DNA (ssDNA) intermediates produced during HIV replication. A non-catalytic domain in A3G binds strongly to RNA, an interaction crucial for recruitment of A3G to the virion; yet, A3G displays no deamination activity for cytidines in viral RNA. Here, we report NMR and molecular dynamics (MD) simulation analysis for interactions between A3Gctd and multiple substrate or non-substrate DNA and RNA, in combination with deamination assays. NMR ssDNA-binding experiments revealed that the interaction with residues in helix1 and loop1 (T201-L220) distinguishes the binding mode of substrate ssDNA from non-substrate. Using 2'-deoxy-2'-fluorine substituted cytidines, we show that a 2'-endo sugar conformation of the target deoxycytidine is favored for substrate binding and deamination. Trajectories of the MD simulation indicate that a ribose 2'-hydroxyl group destabilizes the pi-pi stacking of the target cytosine and H257, resulting in dislocation of the target cytosine base from the catalytic position. Interestingly, APOBEC3A, which can deaminate ribocytidines, retains the ribocytidine in the catalytic position throughout the MD simulation. Our results indicate that A3Gctd catalytic selectivity against RNA is dictated by both the sugar conformation and 2'-hydroxyl group.