Abstract: Investigating the dynamics of structural elements in functional RNAs is important to better understand their mechanism and for engineering RNAs with novel functions. Previously, we performed rational engineering studies with the Varkud satellite (VS) ribozyme and switched its specificity toward non-natural hairpin substrates through modification of a critical kissing-loop interaction (KLI). We identified functional VS ribozyme variants with surrogate KLIs (ribosomal RNA L88/L22 and human immunodeficiency virus-1 TAR/TAR*), but they displayed ∼100-fold lower cleavage activity. Here, we characterized the dynamics of KLIs to correlate dynamic properties with function and improve the activity of designer ribozymes. Using temperature replica exchange molecular dynamics, we determined that the natural KLI in the VS ribozyme supports conformational sampling of its closed and active state, whereas the surrogate KLIs display more restricted motions. Based on in vitro selection, the cleavage activity of a VS ribozyme variant with the TAR/TAR* KLI could be markedly improved by partly destabilizing the KLI but increasing conformation sampling. We formulated a mechanistic model for substrate binding in which the KLI dynamics contribute to formation of the active site. Our model supports the modular nature of RNA in which subdomain structure and dynamics contribute to define the thermodynamics and kinetics relevant to RNA function.