Here, we report a single-molecule fluorescence resonance energy transfer (FRET) study of a Diels-Alderase (DAse) ribozyme, a 49-mer RNA with true catalytic properties. The DAse ribozyme was labeled with Cy3 and Cy5 as a FRET pair of dyes to observe intramolecular folding, which is a prerequisite for its recognition and turnover of two organic substrate molecules. FRET efficiency histograms and kinetic data were taken on a large number of surface-immobilized ribozyme molecules as a function of the Mg(2+) concentration in the buffer solution. From these data, three separate states of the DAse ribozyme can be distinguished, the unfolded (U), intermediate (I) and folded (F) states. A thermodynamic model was developed to quantitatively analyze the dependence of these states on the Mg(2+) concentration. The FRET data also provide information on structural properties. The I state shows a strongly cooperative compaction with increasing Mg(2+) concentration that arises from association with several Mg(2+) ions. This transition is followed by a second Mg(2+)-dependent cooperative transition to the F state. The observation of conformational heterogeneity and continuous fluctuations between the I and F states on the approximately 100 ms timescale offers insight into the folding dynamics of this ribozyme.