V(D)J recombination generates diversity in the immune system through t
he lymphoid-specific assembly of multiple gene segments into functiona
l immunoglobulin and T-cell receptor genes (for reviews, see refs 1, 2
). The first step in V(D)J recombination is cleavage of DNA at recombi
nation signal sequences. Cleavage produces a blunt DNA end on each sig
nal sequence and a hairpin end on adjacent coding gene segments(3,4),
and can be reproduced in vitro by using purified RAG1 and RAG2 protein
s(5,6). The later steps involve processing and joining of the cleaved
DNA ends, and until now have been studied only in cells, Here we recon
stitute the complete V(D)J recombination reaction in a cell-free syste
m, We find that the RAG proteins are not only involved in cleavage, bu
t are also needed in the later steps for efficient joining of coding e
nds. Joining is largely directed by short pieces of identical sequence
in the coding flanks, but addition of human DNA ligase I results in g
reater diversity. Coding junctions contain short deletions as well as
additions complementary to a coding flank (P nucleotides). Addition of
non-templated nucleotides into coding junctions is mediated by termin
al deoxyribonucleotidyl transferase. The cell-free reaction can theref
ore reproduce the complete set of processing events that occur in cell
s.