The ATPase Prp16 governs equilibrium between the branching (B∗/C) and exon ligation (C∗/P) conformations of the spliceosome. Here, we present the electron cryomicroscopy reconstruction of the Saccharomyces cerevisiae C-complex spliceosome at 2.8 Å resolution and identify a novel C-complex intermediate (Ci) that elucidates the molecular basis for this equilibrium. The exon-ligation factors Prp18 and Slu7 bind to Ci before ATP hydrolysis by Prp16 can destabilize the branching conformation. Biochemical assays suggest that these pre-bound factors prime the C complex for conversion to C∗ by Prp16. A complete model of the Prp19 complex (NTC) reveals how the branching factors Yju2 and Isy1 are recruited by the NTC before branching. Prp16 remodels Yju2 binding after branching, allowing Yju2 to remain tethered to the NTC in the C∗ complex to promote exon ligation. Our results explain how Prp16 action modulates the dynamic binding of step-specific factors to alternatively stabilize the C or C∗ conformation and establish equilibrium of the catalytic spliceosome. Display omitted •Cryo-EM reveals new Ci spliceosome intermediate between branching and exon ligation•Binding of branching and exon-ligation factors to Ci governs spliceosome equilibrium•Exon-ligation factors Slu7 and Prp18 bind Ci weakly before Prp16 action•After Prp16 action, pre-bound Slu7 and Prp18 bind strongly to promote exon ligation Genetic and biochemical studies suggested that the two steps of pre-mRNA splicing are in thermodynamic equilibrium through two major conformations of the spliceosome during catalysis. Here, the structure of a new spliceosome intermediate between these two conformations reveals how the binding of step-specific protein factors establishes equilibrium of the spliceosome.