The lymphoid cell-specific proteins RAGI and RAG2 initiate V(D)J recombinat
ion by cleaving DNA adjacent to recombination signals, generating blunt sig
nal ends and covalently sealed, hairpin coding ends. A critical next step i
n the reaction is opening of the hairpins, but the factor(s) responsible ha
s not been identified and had been thought to be a ubiquitous component(s)
of the DNA repair machinery. Here we demonstrate that RAG1 and RAG2 possess
an intrinsic single-stranded nuclease activity capable of nicking hairpin
coding ends at or near the hairpin tip. In Mn2+, a synthetic hairpin is nic
ked 5 nucleotides (nt) 5' of the hairpin tip, with more distant sites of ni
cking suppressed by HMG2. In Mg2+, hairpins generated by V(D)J cleavage are
nicked whereas synthetic hairpins are not. Cleavage-generated hairpins are
nicked at the tip and predominantly 1 to 2 nt 5' of the tip. RAG1 and RAG2
may therefore be responsible for initiating the processing of coding ends
and for the generation of P nucleotides during V(D)J recombination.