We have used single-molecule spectroscopy to untangle conformational dynamics and internal chemistry in the hairpin ribozyme. The active site of the ribozyme is stably formed by docking two internal loops, but upon cleavage undocking is accelerated by two orders of magnitude. The markedly different kinetic properties allow us to differentiate cleaved and ligated forms, and thereby observe multiple cycles of internal cleavage and ligation of a ribozyme in a uniquely direct way. The position of the internal equilibrium is biased toward ligation, but the cleaved ribozyme undergoes several undocking events before ligation, during which products may dissociate. Formation of the stably docked active site, rapid undocking after cleavage, and a strong bias toward ligation should combine to generate a stable circular template for the synthesis of the viral (+) strand and thus ensure a productive replication cycle.