We perform molecular dynamics simulations, based on recent crystallographic data, on the 8–17 DNAzyme at four states along the reaction pathway to determine the dynamical ensemble for the active state and transition state mimic in solution. A striking finding is the diverse roles played by Na+ and Pb2+ ions in the electrostatically strained active site that impact all four fundamental catalytic strategies, and share commonality with some features recently inferred for naturally occurring hammerhead and pistol ribozymes. The active site Pb2+ ion helps to stabilize in-line nucleophilic attack, provides direct electrostatic transition state stabilization, and facilitates leaving group departure. A conserved guanine residue is positioned to act as the general base, and is assisted by a bridging Na+ ion that tunes the pKa and facilitates in-line fitness. The present work provides insight into how DNA molecules are able to solve the RNA-cleavage problem, and establishes functional relationships between the mechanism of these engineered DNA enzymes with their naturally evolved RNA counterparts. This adds valuable information to our growing body of knowledge on general mechanisms of phosphoryl transfer reactions catalyzed by RNA, proteins and DNA.