The pistol ribozyme (Psr) is among the most recently discovered RNA enzymes, and has been the subject of experiments aimed at elucidating mechanism. Recent biochemical studies have revealed exciting clues about catalytic interactions in the active site not apparent from available crystallographic data. The present work unifies the interpretation of the existing body of structural and functional data on Psr by providing a dynamical model for the catalytically active state in solution from molecular simulation. Our results suggest that a catalytic Mg2+ ion makes inner-sphere contact with G33:N7 and outer-sphere coordination to the pro-Rp of the scissile phosphate, promoting electrostatic stabilization of the dianionic transition state and neutralization of the developing charge of the leaving group through a metal-coordinated water molecule that is made more acidic by a hydrogen bond donated from the 2’OH of P32. This model is consistent with experimental activity-pH and mutagenesis data, including sensitivity to G33(7cG) and phosphorothioate substitution/metal ion rescue. The model suggests several experimentally testable predictions including stereospecific thio substitutions and G42X (X=xanthine) mutations, some of which have appeared and been validated during the review of this work. Further, the model identifies striking similarities of Psr to the hammerhead ribozyme (HHr), including: similar global fold, organization of secondary structure around an active site 3-way junction, catalytic metal ion binding mode, and guanine general base. However, the specific binding mode and role of the Mg2+ ion, as well as a conserved 2’-OH in the active site, are inter-related but subtly different between the ribozymes.