Short RNA sequences exhibiting the activity of a target RNA cleavage are promising for cellular gene regulation and biosensor research, but the reaction media different from an aqueous solution may cause unanticipated molecular interactions and properties. In this study, we investigated the molecular crowding effects arising from steric crowding and altered solvent properties on the hammerhead ribozyme activity using water-soluble neutral cosolutes. Poly(ethylene glycol) (PEG) and other cosolutes at 20 wt % increased the RNA hydrolysis rate by a factor of 2.0-6.6 at 10 MM MgCl2 and much more at lower MgCl2 concentrations. Remarkably, although the cosolutes decreased the stability of the ribozyme stem helices, the thermal inactivation temperature of the ribozyme was significantly raised, resulting in a higher reaction rate, up to 270 times at 50 degrees C. More significantly, PEG decreased the metal ion concentration to perform the reaction even with a limiting Mg2+ or Na+ concentration, facilitated the catalytic turnover, and activated a catalytically less active ribozyme sequence. These observations agreed that the cosolutes acted as an osmolyte stabilizing the water-release reaction of the RNA tertiary folding but destabilizing the water-uptake reaction of Watson-Crick base pairing. The opposite cosolute effect on the stabilities of RNA secondary and tertiary structures, which is fundamentally different from a protein folding, suggests how RNA stabilizes a tertiary structure and enhances the catalytic activity in molecular crowding media.