Transient kinetic studies with fluorescence detection were used to determine the effects of Mg2+ concentration and the 2' OH group of guanosine monophosphate, prG, substrate on various steps in the transesterification reaction of prG with 5' pyrene-labeled oligonucleotides as catalyzed by the L-21 ScaI ribozyme. The effect of increasing Mg2+ from 5 to 10 mM on the rate constants of association and dissociation of 5' pyrene-labeled CUCUA at 15 degrees C was measured. The rate constant of association increases about 3-fold to (8.7 +/- 0.7) x 10(6) M-1 s(-1) at 10 mM Mg2+. The rate constant for dissociation is 25 +/- 4 s(-1) at 10 mM Mg2+, within experimental error of the rate constant of 17 +/- 5 s(-1) measured at 5 mM Mg2+. This Mg2+ dependence is attributed to nonspecific binding of Mg2+ to the duplex helix. In the absence of prG, no docking of substrate is observed. The effect of Mg2+ concentration on rates for docking of 5' pyrene-labeled substrate, pyrCCUCUA, were measured at [Mg2+] greater than or equal to 2 mM and at temperatures less than or equal to 20 degrees C, where optical melting curves indicate global folding is complete. Thus the rates monitor local folding steps important for catalytic function. Three and possibly four local cooperative transitions were induced by Mg2+. The fastest fluorescence transient, which is associated with substrate docking, changes from a quenching to an enhancement between 2 and 4 mM Mg2+, and its observed rate constant at pH 6.5 and 7.5 is about 1 s(-1), independent of [Mg2+] when 4 s [Mg2+] less than or equal to 15 mM. The slowest fluorescence transient, which is apparently associated with transesterification, has an observed rate constant that continues to increase when [Mg2+] greater than or equal to 4 mM. In the presence of Ca2+, such that [Ca2+] + [Mg2+] = 15 mM, the observed rate constants of both transients are constant when 4 mM less than or equal to [Mg2+] less than or equal to 7 mM but double between 7 and 11 mM Mg2+. At pH 6.5 when 4 mM less than or equal to [Mg2+] less than or equal to 7 mM in the absence of Ca2+, there is also evidence for a third transient with a Mg2+-dependent observed rate constant that is intermediate between the observed rate constants of docking and transesterification. Thus these experiments reveal several separable, local folding transitions that are dependent on Mg2+ in a very cooperative manner and are important for function. When pdG is substituted for prG, no transesterification is observed, and fluorescence quenching is observed for 1-15 mM Mg2+. The switch from fluorescence enhancements with pre to quenching with pdG suggests the 2' OH of prG is important for proper positioning of substrate in the catalytic site.