Results of a series of 12 ns molecular dynamics (MD) simulations of the reactant state (with and without a Mg2+ ion), early and late transition state mimics are presented based on a recently reported crystal structure of a full-length hammerhead RNA. The simulation results support a catalytically active conformation with a Mg2+ ion bridging the A9 and scissile phosphates. In the reactant state, the Mg2+ spends significant time closely associated with the 2'OH of G8, but remains fairly distant from the leaving group O(5') position. In the early TS mimic simulation, where the nucleophilic O(2') and leaving group O(5') are equidistant from the phosphorus, the Mg2+ ion remains tightly coordinated to the 2'OH of G8, but is positioned closer to the O(5') leaving group, stabilizing the accumulating charge. In the late TS mimic simulation, the coordination around the bridging Mg2+ ion undergoes a transition whereby the coordination with the 2'OH of G8 is replace by the leaving group O(5') that has developed significant charge. At the same time, the 2'OH of G8 forms a hydrogen bond with the leaving group O(5') and is positioned to act as a general acid catalyst. This work represents the first reported simulations of the full-length hammerhead structure and TS mimics, and provides direct evidence for the possible role of a bridging Mg2+ ion in catalysis that is consistent with both crystallographic and biochemical data.