The hepatitis delta virus (HDV) ribozyme and HDV-like ribozymes are self-cleaving RNAs found throughout all kingdoms of life. These RNAs fold into a double-nested pseudoknot structure and cleave RNA, yielding 2',3'-cyclic phosphate and 5'-hydroxyl termini. The active site nucleotide C75 has a pK(a) shifted >2 pH units toward neutrality and has been implicated as a general acid/base in the cleavage reaction. An active site Mg(2+) ion that helps activate the 2'-hydroxyl for nucleophilic attack has been characterized biochemically; however, this ion has not been visualized in any previous structures. To create a snapshot of the ribozyme in a state poised for catalysis, we have crystallized and determined the structure of the HDV ribozyme bound to an inhibitor RNA containing a deoxynucleotide at the cleavage site. This structure includes the wild-type C75 nucleotide and Mg(2+) ions, both of which are required for maximal ribozyme activity. This structure suggests that the position of C75 does not change during the cleavage reaction. A partially hydrated Mg(2+) ion is also found within the active site where it interacts with a newly resolved G.U reverse wobble. Although the inhibitor exhibits crystallographic disorder, we modeled the ribozyme-substrate complex using the conformation of the inhibitor strand observed in the hammerhead ribozyme. This model suggests that the pro-R(P) oxygen of the scissile phosphate and the 2'-hydroxyl nucleophile are inner-sphere ligands to the active site Mg(2+) ion. Thus, the HDV ribozyme may use a combination of metal ion Lewis acid and nucleobase general acid strategies to effect RNA cleavage.