DEAD-box RNA helicases, which are involved in virtually all aspects of RNA metabolism, are generally viewed as enzymes that unwind RNA duplexes or disrupt RNA-protein interactions in an ATP-dependent manner. Here, we show in vitro that the DEAD-box protein DED1 from Saccharomyces cerevisiae promotes not only RNA unwinding but also strand annealing, the latter in such a profound fashion that the physical limit for a bimolecular association rate constant is approached. We further demonstrate that DED1 establishes an ATP-dependent steady state between unwinding and annealing, which enables the enzyme to modulate the balance between the two opposing activities through ATP and ADP concentrations. The ratio between unwinding and annealing and the degree to which both activities are ATP- and ADP-modulated are strongly influenced by structured as well as unstructured regions in the RNA substrate. Collectively, these findings expand the known functional repertoire of DEAD-box proteins and reveal the capacity of DED1 to remodel RNA in response to ADP and ATP concentrations by facilitating not only disruption but also formation of RNA duplexes.