The ribosome accelerates the rate of peptidyl transfer by >10⁶‐fold relative to the background rate. A widely accepted model for this rate enhancement invokes entropic effects whereby the ribosome and the 2′‐OH of the peptidyl‐tRNA substrate precisely position the reactive moieties through an extensive network of hydrogen bonds that allows proton movement through them. Some studies, however, have called this model into question because they find the 2′‐OH of the peptidyl‐tRNA to be dispensable for catalysis. Here, we use an in vitro reconstituted translation system to resolve these discrepancies. We find that catalysis is at least 100‐fold slower with the dA76‐substituted peptidyl‐tRNA substrate and that the peptidyl transferase centre undergoes a slow inactivation when the peptidyl‐tRNA lacks the 2′‐OH group. Additionally, the 2′‐OH group was found to be critical for EFTu binding and peptide release. These findings reconcile the conflict in the literature, and support a model where interactions between active site residues and the 2′‐OH of A76 of the peptidyl‐tRNA are pivotal in orienting substrates in this active site for optimal catalysis.