A methyltransferase ribozyme (MTR1) was selected in vitro to catalyze alkyl transfer from exogenous O6-methylguanine (O6mG) to a target adenine N1, and recently, high-resolution crystal structures have become available. We use a combination of classical molecular dynamics, ab initio quantum mechanical/molecular mechanical (QM/MM) and alchemical free energy (AFE) simulations to elucidate the atomic-level solution mechanism of MTR1. Simulations identify an active reactant state involving protonation of C10 that hydrogen bonds with O6mG:N1. The deduced mechanism involves a stepwise mechanism with two transition states corresponding to proton transfer from C10:N3 to O6mG:N1 and rate-controlling methyl transfer (19.4  kcal·mol−1 barrier). AFE simulations predict the pKa for C10 to be 6.3, close to the experimental apparent pKa of 6.2, further implicating it as a critical general acid. The intrinsic rate derived from QM/MM simulations, together with pKa calculations, enables us to predict an activity–pH profile that agrees well with experiment. The insights gained provide further support for a putative RNA world and establish new design principles for RNA-based biochemical tools.