RNA enzymes serve as a potentially powerful platform from which to design catalysts and engineer new biotechnology. A fundamental understanding of these systems provides insight to guide design. The hepatitis delta virus ribozyme (HDVr) is a small, self-cleaving RNA motif widely distributed in nature, which has served as a paradigm for understanding the basic principles of RNA catalysis. Nevertheless, questions remain regarding the precise roles of divalent metal ions and key nucleotides in catalysis. In an effort to establish a reaction mechanism model consistent with available experimental data, we utilize molecular dynamics simulations to explore different conformations and metal ion binding modes along the HDVr reaction path. Building upon recent crystallographic data, our results provide a dynamic model of the HDVr reaction mechanism involving a conformational switch between multiple noncanonical G25:U20 base pair conformations in the active site. These local nucleobase dynamics play an important role in catalysis by modulating the metal binding environments of two Mg2+ ions that support catalysis at different steps of the reaction pathway. The first ion plays a structural role by inducing a base pair flip necessary to obtain the catalytic fold in which C75 moves towards to the scissile phosphate in the active site. Ejection of this ion then permits a second ion to bind elsewhere in the active site and facilitate nucleophile activation. The simulations collectively describe a mechanistic scenario that is consistent with currently available experimental data from crystallography, phosphorothioate substitutions, and chemical probing studies. Avenues for further experimental verification are suggested.