Hairpin ribozyme catalyzes the reversible self-cleavage of phosphodiester bonds which plays prominent roles in key biological processes involving RNAs. Despite impressive advances on ribozymatic self-cleavage, critical aspects of its molecular reaction mechanism remain controversially debated. Here, we generate and analyze the multidimensional free energy landscape that underlies the reaction using extensive QM/MM metadynamics simulations to investigate in detail the full self-cleavage mechanism. This allows us to answer several pertinent yet controversial questions concerning activation of the 2'-OH group, the mechanistic role of water molecules present in the active site, and the full reaction pathway including the structures of transition states and intermediates. Importantly, we find that a sufficiently unrestricted reaction subspace must be mapped using accelerated sampling methods in order to compute the underlying free energy landscape. It is shown that lower-dimensional sampling where the bond formation and cleavage steps are coupled does not allow the system to sufficiently explore the landscape. On the basis of a three-dimensional free energy surface spanned by flexible generalized coordinates, we find that 2'-OH is indirectly activated by adjacent G8 nucleobase in conjunction with stabilizing H-bonding involving water. This allows the proton of the 2'-OH group to directly migrate toward the 5'-leaving group via a nonbridging oxygen of the phosphodiester link. At variance with similar enzymatic processes where water wires connected to protonable side chains of the protein matrix act as transient proton shuttles, no such de/reprotonation events of water molecules are found to be involved in this ribozymatic transesterification. Overall, our results support an acid-catalyzed reaction mechanism where A38 nucleobase directly acts as an acid whereas G8, in stark contrast, participates only indirectly via stabilizing the nascent nucleophile for subsequent attack. Moreover, we conclude that self-cleavage of hairpin ribozyme follows an A(N) + D-N two-step associative pathway where the rate-determining step is the cleavage of the phosphodiester bond. These results provide a major advancement in our understanding of the unique catalytic mechanism of hairpin ribozyme which will fruitfully impact on the design of synthetic ribozymes.