Histone variant H2A.Z-containing nucleosomes are incorporated at most eukaryotic promoters. This incorporation is mediated by the conserved SWR1 complex, which replaces histone H2A in canonical nucleosomes with H2A.Z in an ATP-dependent manner. Here, we show that promoter-proximal nucleosomes are highly heterogeneous for H2A.Z in Saccharomyces cerevisiae, with substantial representation of nucleosomes containing one, two, or zero H2A.Z molecules. SWR1-catalyzed H2A.Z replacement in vitro occurs in a stepwise and unidirectional fashion, one H2A.Z-H2B dimer at a time, producing heterotypic nucleosomes as intermediates and homotypic H2A.Z nucleosomes as end products. The ATPase activity of SWR1 is specifically stimulated by H2A-containing nucleosomes without ensuing histone H2A eviction. Remarkably, further addition of free H2A.Z-H2B dimer leads to hyperstimulation of ATPase activity, eviction of nucleosomal H2A-H2B, and deposition of H2A.Z-H2B. These results suggest that the combination of H2A-containing nucleosome and free H2A.Z-H2B dimer acting as both effector and substrate for SWR1 governs the specificity and outcome of the replacement reaction.