DAMAGE-SPECIFIC recognition and incision of DNA during nucleotide excision repair in yeast1 and mammalian cells2 requires multiple gene products. Amino-acid sequence homology between several yeast and mammalian genes suggests that the mechanism of nucleotide excision repair is conserved in eukaryotes2-7, but very little is known about its biochemistry. In the yeast Saccharomyces cerevisiae at least 6 genes are needed for this process, including RAD1 and RAD10 (ref. 1). Mutations in the two genes inactivate nucleotide excision repair8,9 and result in a reduced efficiency of mitotic recombinational events between repeated sequences10-15. The Rad10 protein has a stable and specific interaction with Rad1 protein16,17 and also binds to single-stranded DNA and promotes annealing of homologous single-stranded DNA18 The amino-acid sequence of the yeast Rad10 protein is homologous with that of the human excision repair gene ERCC1 (ref. 3). Here we demonstrate that a complex of purified Rad1 and Rad10 proteins specifically degrades single-stranded DNA by an endonucleolytic mechanism. This endonuclease activity is presumably required to remove non-homologous regions of single-stranded DNA during mitotic recombination between repeated sequences as previously suggested13, and may also be responsible for the specific incision of damaged DNA during nucleotide excision repair.