Human Argonaute 2 (hAgo2) constitutes the functional core of the RNA interference pathway. Guide RNAs direct hAgo2 to target mRNAs, which ultimately leads to hAgo2-mediated mRNA degradation or translational inhibition. Here, we combine site-specifically labeled hAgo2 with time-resolved single-molecule FRET measurements to monitor conformational states and dynamics of hAgo2 and hAgo2-RNA complexes in solution that remained elusive so far. We observe dynamic anchoring and release of the guide's 3'-end from the PAZ domain during the stepwise target loading process even with a fully complementary target. We find differences in structure and dynamic behavior between partially and fully paired canonical hAgo2-guide/target complexes and the miRNA processing complex formed by hAgo2 and pre-miRNA451. Furthermore, we detect a hitherto unknown conformation of hAgo2-guide/target complexes that poises them for target-directed miRNA degradation. Taken together, our results show how the conformational flexibility of hAgo2-RNA complexes determines function and the fate of the ribonucleoprotein particle. Single-molecule FRET measurements provide detailed insights into the conformational states and dynamics of human Argonaute 2 that are required for its function at the core of the eukaryotic RNA silencing pathway.