Metal ion requirements for RNA binding, cleavage, and ligation by the hairpin ribozyme have been analyzed. RNA cleavage is observed when Mg2+, Sr2+, or Ca2+ are added to a 40 mM Tris-HCl buffer, indicating that these divalent cations were capable of supporting the reaction. No reaction was observed when other ions (Mn2+, Co2+, Cd2+, Ni2+, Ba2+, Na+, K+, Li+, NH4+, Rb+, and Cs+) were tested. In the absence of added metal ions, spermidine can induce a very slow ribozyme-catalyzed cleavage reaction that is not quenched by chelating agents (EDTA and EGTA) that are capable of quenching the metal-dependent reaction. Addition of Mn2+ to a reaction containing 2 mM spermidine increases the rate of the catalytic step by at least 100-fold. Spermidine also reduces the magnesium requirement for the reaction and strongly stimulates activity at limiting Mg2+ concentrations. There are no special ionic requirements for formation of the initial ribozyme-substrate complex--analysis of complex formation using native gels and kinetic assays shows that the ribozyme can bind substrate in 40 mM Tris-HCl buffer. Complex formation is inhibited by both Mn2+ and Co2+. Ionic requirements for the ribozyme-catalyzed ligation reaction are very similar to those for the cleavage reaction. We propose a model for catalysis by the hairpin ribozyme that is consistent with these findings. Formation of an initial ribozyme-substrate complex occurs without the obligatory involvement of divalent cations. Ions (e.g., Mg2+) can then bind to form a catalytically proficient complex, which reacts and dissociates.(ABSTRACT TRUNCATED AT 250 WORDS)