H/ACA ribonucleoproteins catalyse the sequence-dependent pseudouridylation of ribosomal and spliceosomal RNAs. Here, we reconstitute site-specifically fluorophore labelled H/ACA complexes and analyse their structural dynamics using single-molecule FRET spectroscopy. Our results show that the guide RNA is distorted into a substrate-binding competent conformation by specific protein interactions. Analysis of the reaction pathway using atomic mutagenesis establishes a new model how individual protein domains contribute to catalysis. Taken together, these results identify and characterize individual roles for all accessory proteins on the assembly and function of H/ACA RNPs.