Abstract SARS-CoV-2 enters host cells through an interaction between the spike glycoprotein and the angiotensin converting enzyme 2 (ACE2) receptor. Directly preventing this interaction presents an attractive possibility for suppressing SARS-CoV-2 replication. Here, we report the isolation and characterization of an alpaca-derived single domain antibody fragment, Ty1, that specifically targets the receptor binding domain (RBD) of the SARS-CoV-2 spike, directly preventing ACE2 engagement. Ty1 binds the RBD with high affinity, occluding ACE2. A cryo-electron microscopy structure of the bound complex at 2.9 Å resolution reveals that Ty1 binds to an epitope on the RBD accessible in both the ‘up’ and ‘down’ conformations, sterically hindering RBD-ACE2 binding. While fusion to an Fc domain renders Ty1 extremely potent, Ty1 neutralizes SARS-CoV-2 spike pseudovirus as a 12.8 kDa nanobody, which can be expressed in high quantities in bacteria, presenting opportunities for manufacturing at scale. Ty1 is therefore an excellent candidate as an intervention against COVID-19.