The Tetrahymena thermophila L-21 ScaI ribozyme utilizes Mg2+ to catalyze a site-specific endonuclease reaction analogous to the first step of self-splicing. To better understand the contribution of Mg2+ to ribozyme activity, the Mg2+ concentration dependence of individual rate constants was examined at concentrations greater than those required for ribozyme folding (>2 mM; at 50 degrees C and pH 6.7). Analysis of metal ion inhibition of the chemical step of the reaction indicated that two Ca2+ ions compete with two Mg2+ ions involved in active site chemistry. These Mg2+ ions are bound tightly to the E.S complex (Kd < 2 mM). The rate constant for association of the oligoribonucleotide substrate (S) increased 12-fold from 2 to 100 mM Mg2+ and exhibited saturation behavior, consistent with a single Mg2+ ion involved in S association that binds to the free ribozyme with a Kd for Mg2+ of 15 mM. The preference for the divalent metal ion (Mg2+ congruent with Ca2+ > Ba2+ >> Sr2+) suggested that enhancing the rate constant of S association is not simply a function of ionic strength, but is due to a distinct metal ion binding site. Even though Ca2+ does not support reaction, the RNA substrate S was able to bind in the presence of Ca2+. Upon addition of Mg2+, S was cleaved without first dissociating. A model is proposed in which the inactive Ca2+ form of E.S is structurally equivalent to the open complex along the reaction pathway, which has the RNA substrate bound but not docked into the active site. Weaker binding of S in Ca2+ was shown to result from an increase in the rate constant of S dissociation, leading to the proposal that a tight Mg2+ binding site or sites in the E.S complex contribute to the strong binding of S. In summary, the data provide evidence for four functions for bound Mg2+ ions in the catalytic cycle: one increases the rate of RNA substrate binding, one or more decrease the rate of dissociation of S, and two are involved in the chemical step.