Membrane-free complex coacervate microdroplets are compelling models for primitive compartmentalisation with the ability to form from biological molecules. However, understanding how molecular interactions can influence physicochemical properties and catalytic activity of membrane-free compartments is still in its infancy. This is important for defining the function of membrane-free compartments during the origin of life as well as in modern biology. Here, we use RNA-peptide coacervate microdroplets prepared with prebiotically relevant amino acids and a minimal hammerhead ribozyme. This is a model system to probe the relationship between coacervate composition, its properties and ribozyme activity. We show that ribozyme catalytic activity is inhibited within the coacervate compared to buffer solution, whilst variations in peptide sequence can modulate rates and yield of the ribozyme within the coacervate droplet by up to 15-fold. The apparent ribozyme rate constant is anti-correlated with its concentration and correlated to its diffusion coefficient within the coacervates. Our results provide a relationship between the physicochemical properties of the coacervate microenvironment and the catalytic activity of the ribozyme where membrane-free compartments could provide a selection pressure to drive molecular evolution on prebiotic earth.