The hairpin ribozyme comprises two formally unpaired loops carried on two arms of a four-way helical RNA junction. Addition of divalent metal ions brings about a conformational transition into an antiparallel structure in which there is an intimate association between the loops to generate the active form of the ribozyme. In this study, we have used fluorescence resonance energy transfer to analyze the global folding of the complete ribozyme, and the simple four-way junction derived from it, over a wide concentration range of divalent and monovalent metal ions. The simple junction undergoes an ion-induced rotation into an antiparallel form. In the presence of a constant background concentration of sodium ions, the magnesium-ion-induced transition is characterized by noncooperative binding with a Hill coefficient n = 1. By contrast, the magnesium-ion-induced folding of the complete ribozyme is more complex, involving two distinct binding phases. The first phase occurs in the micromolar range, and involves the cooperative binding of at least three magnesium ions. This can also be achieved by high concentrations of sodium ions, and is therefore likely to be due to diffuse binding of cations at the junction and the interface of the loop–loop interaction. The second phase occurs in the millimolar range, and can only be induced by divalent metal ions. This transition occurs in response to the noncooperative, site-specific binding of magnesium ions. We observe a good correlation between the extent of ion-induced folding and cleavage activity.