The CRISPR/Cas system uses guide RNAs (gRNAs) to direct sequence-specific DNA cleavage. Not every gRNA elicits cleavage and the mechanisms that govern gRNA activity have not been resolved. Low activity could result from either failure to form a functional Cas9-gRNA complex or inability to recognize targets in vivo. Here we show that both phenomena influence Cas9 activity by comparing mutagenesis rates in zebrafish embryos with in vitro cleavage assays. In vivo, our results suggest that genomic factors such as CTCF inhibit mutagenesis. Comparing near-identical gRNA sequences with different in vitro activities reveals that internal gRNA interactions reduce cleavage. Even though gRNAs containing these structures do not yield cleavage-competent complexes, they can compete with active gRNAs for binding to Cas9. These results reveal that both genomic context and internal gRNA interactions can interfere with Cas9-mediated cleavage and illuminate previously uncharacterized features of Cas9-gRNA complex formation.