The Crab Nebula was formed after the collapse of a massive star about a thousand years ago, leaving behind a pulsar that inflates a bubble of ultra-relativistic electron-positron pairs permeated with magnetic field. The observation of brief but bright flares of energetic gamma rays suggests that pairs are accelerated to PeV energies within a few days; such rapid acceleration cannot be driven by shocks. Here, it is argued that the flares may be the smoking gun of magnetic dissipation in the Nebula. Using 2D and 3D particle-in-cell simulations, it is shown that the observations are consistent with relativistic magnetic reconnection, where pairs are subject to strong radiative cooling. The Crab flares may highlight the importance of relativistic magnetic reconnection in astrophysical sources.