The VS nucleolytic ribozyme has a core comprising five helices organized by two three-way junctions. The ribozyme can act in trans on a hairpin-loop substrate, with which it interacts via tertiary contacts. We have determined that one of the junctions (2-3-6) undergoes two-stage ion-dependent folding into a stable conformation, and have determined the global structure of the folded junction using long-range distance restraints derived from fluorescence resonance energy transfer. A number of sequence variants in the junction are severely impaired in ribozyme cleavage, and there is good correlation between changes in activity and alteration in the folding of junction 2-3-6. These studies point to a special importance of G and A nucleotides immediately adjacent to helix II, and comparison with a similar junction of known structure indicates that this could adopt a guanine-wedge structure. We propose that the 2-3-6 junction organizes important aspects of the structure of the ribozyme to facilitate productive association with the substrate, and suggest that this results in an interaction between the substrate and the A730 loop to create the active complex.