The hairpin ribozyme, derived from the negative strand of the satellite RNA of tobacco ringspot virus, belongs to the class of small catalytic RNAs that cleave RNA to generate 2',3'-cyclic phosphate and 5'hydroxyl termini and ligate these termini in the reverse reaction to form 3',5'-phosphodiesters. Rate and equilibrium constants for binding, dissociation, cleavage, and ligation steps in the kinetic mechanism were determined using a series of hairpin ribozyme/substrate pairs that differed in the sequence and length of the intermolecular base-paired helices. All hairpin variants cleaved with rate constants of approximately 0.3 min-1 at pH 7.5 in 10 nM MgCl2 at 25 degrees C, regardless of the length or sequence of the intermolecular helices. A rate constant of approximately 3 min-1 was determined for an intermolecular ligation reaction in which both cleavage products were supplied to the ribozyme in trans. Thus, the hairpin favored ligation over cleavage by 10-fold when the ribozyme was saturated with cleavage products. Binding rate constants for cleavage substrates and products were comparable to values reported for other catalytic RNAs but were somewhat slower than binding rates typical of small RNA helices. Substrate dissociation rate constants were much slower than cleavage rate constants for all substrates. Because virtually every substrate that was bound was cleaved before it could dissociate, KMS values were not the same as KdS values. Instead, KMS reflected the ratio of cleavage and substrate binding rate constants and had the same value of approximately 30 nM for all substrates. Calculations based on empirically determined free energy parameters for simple RNA helices indicated that complexes between ribozymes and 5'-cleavage products were slightly less stable than simple helices with the same sequences. In contrast, affinities between ribozymes and cleavage substrates and between ribozymes and 3'-cleavage products were stronger than expected for simple duplexes by about -2.5 kcal/mol, evidence of stabilizing interactions in addition to those contributed by helical base pairs. This kinetic and thermodynamic study demonstrates that the kinetic mechanism of the hairpin ribozyme is distinct from the kinetic mechanisms of other well-characterized ribozymes and provides a foundation for further exploration of the hairpin structure and catalytic mechanism.