SNARE (soluble N-ethylmaleimide-sensitive factor attachment protein receptor) proteins mediate fusion by pulling biological membranes together via a zippering mechanism. Recent biophysical studies have shown that t- and v-SNAREs can assemble in multiple stages from the N-termini toward the C-termini. Here we show that functionally, membrane fusion requires a sequential, two-step folding pathway and assign specific and distinct functions for each step. First, the N-terminal domain (NTD) of the v-SNARE docks to the t-SNARE, which leads to a conformational rearrangement into an activated half-zippered SNARE complex. This partially assembled SNARE complex locks the C-terminal (CTD) portion of the t-SNARE into the same structure as in the postfusion 4-helix bundle, thereby creating the binding site for the CTD of the v-SNARE and enabling fusion. Then zippering of the remaining CTD, the membrane-proximal linker (LD), and transmembrane (TMD) domains is required and sufficient to trigger fusion. This intrinsic property of the SNAREs fits well with the action of physiologically vital regulators such as complexin. We also report that NTD assembly is the rate-limiting step. Our findings provide a refined framework for delineating the molecular mechanism of SNARE-mediated membrane fusion and action of regulatory proteins.