DNA is increasingly being used as the engineering material of choice for the construction of nanoscale circuits, structures, and motors. Many of these enzyme-free constructions function by DNA strand displacement reactions. The kinetics of strand displacement can be modulated by toeholds, short single-stranded segments of DNA that colocalize reactant DNA molecules. Recently, the toehold exchange process was introduced as a method for designing fast and reversible strand displacement reactions. Here, we characterize the kinetics of DNA toehold exchange and model it as a three-step process. This model is simple and quantitatively predicts the kinetics of 85 different strand displacement reactions from the DNA sequences. Furthermore, we use toehold exchange to construct a simple catalytic reaction. This work improves the understanding of the kinetics of nucleic acid reactions and will be useful in the rational design of dynamic DNA and RNA circuits and nanodevices.