Proteins often require cofactors to perform their biological functions and must fold in the presence of their cognate ligands. Using circular dichroism spectroscopy, we investigated the effects of divalent metal binding upon the folding pathway of Escherichia coli RNase HI. This enzyme binds divalent metal in its active site, which is proximal to the folding core of RNase HI as defined by hydrogen/deuterium exchange studies. Metal binding increases the apparent stability of native RNase HI chiefly by reducing the unfolding rate. As with the apo-form of the protein, refolding from high denaturant concentrations in the presence of Mg2+ follows three-state kinetics: formation of a rapid burst phase followed by measurable single exponential kinetics. Therefore, the overall folding pathway of RNase HI is minimally perturbed by the presence of metal ions. Our results indicate that the metal cofactor enters the active site pocket only after the enzyme reaches its native fold, and therefore, divalent metal binding stabilizes the protein by decreasing its unfolding rate. Furthermore, the binding of the cofactor is dependent upon a carboxylate critical for activity (Asp10). A mutation in this residue (D10A) alters the folding kinetics in the absence of metal ions such that they are similar to those observed for the unaltered enzyme in the presence of metal.