The enzyme F1-ATPase has been shown to be a rotary motor in which the central gamma-subunit rotates inside the cylinder made of alpha3beta3 subunits. At low ATP concentrations, the motor rotates in discrete 120 degrees steps, consistent with sequential ATP hydrolysis on the three beta-subunits. The mechanism of stepping is unknown. Here we show by high-speed imaging that the 120 degrees step consists of roughly 90 degrees and 30 degrees substeps, each taking only a fraction of a millisecond. ATP binding drives the 90 degrees substep, and the 30 degrees substep is probably driven by release of a hydrolysis product. The two substeps are separated by two reactions of about 1 ms, which together occupy most of the ATP hydrolysis cycle. This scheme probably applies to rotation at full speed ( approximately 130 revolutions per second at saturating ATP) down to occasional stepping at nanomolar ATP concentrations, and supports the binding-change model for ATP synthesis by reverse rotation of F1-ATPase.