The catalytic activity of the hammerhead ribozyme is limited by its ability to fold into the native tertiary structure. Analysis of folding has been hampered by a lack of assays that can independently monitor the environment of nucleobases throughout the ribozyme-substrate complex in real time. Here, we report the development and application of a new folding assay in which we use pyrrolo-cytosine (pyC) fluorescence to (1) probe active-site formation, (2) examine the ability of peripheral ribozyme domains to support native folding, (3) identify a pH-dependent conformational change within the ribozyme, and (4) explore its influence on the equilibrium between the folded and unfolded core of the hammerhead ribozyme. We conclude that the natural ribozyme folds in two distinct noncooperative steps and the pH-dependent correlation between core folding and activity is linked to formation of the G8-C3 base pair.