The hammerhead ribozyme undergoes an ion-dependent folding process into the active conformation. We find that the folding can be blocked at specific stages by changes of sequence or functionality within the core. In the the absence of added metal ions, the global structure of the hammerhead is extended, with a large angle subtended between stems I and II. No core sequence changes appear to alter this geometry, consistent with an unstructured core under these conditions. Upon addition of low concentrations of magnesium ions, the hammerhead folds by an association of stems II and III, to include a large angle between them. This stage is inhibited or altered by mutations within the oligopurine sequence lying between stems II and III, and folding is completely prevented by an A14G mutation. Further increase in magnesium ion concentration brings about a second stage of folding in the natural sequence hammerhead, involving a reorientation of stem I, which rotates around into the same direction of stem II. Because this transition occurs over the same range of magnesium ion concentration over which the hammerhead ribozyme becomes active, it is likely that the final conformation is most closely related to the active form of the structure. Magnesium ion-dependent folding into this conformation is prevented by changes at G5, notably removal of the 2'-hydroxyl group and replacement of the base by cytidine. The ability to dissect the folding process by means of sequence changes suggests that two separate ion-dependent stages are involved in the folding of the hammerhead ribozyme into the active conformation.