In Saccharomyces cerevisiae, Mre11p/Rad50p/Xrs2p (MRX) complex plays a vital role in several nuclear processes including cellular response to DNA damage, telomere length maintenance, cell cycle checkpoint control and meiotic recombination. Telomeres are comprised of tandem repeats of G-rich DNA and are incorporated into non-nucleosomal chromatin. Although the structure of the yeast telomeric DNA is poorly understood, it has been suggested that the G-rich sequences can fold into G4 DNA, which has been shown to inhibit DNA synthesis by telomerase. However, little is known about the factors and mechanistic aspects of the generation of appropriate termini for DNA synthesis by telomerase. Here, we show that S.cerevisiae Mre11 protein (ScMre11p) possesses substantially higher binding affinity for G4 DNA, over single- or double-stranded DNA, and binding was inhibited by poly(dG) or porphyrin. Binding of ScMre11p to G4 DNA was most robust, compared with G2' DNA and the resulting protein-DNA complexes were strikingly very resistant to dissociation by NaCl. Remarkably, binding of ScMre11p to G4 DNA and G-rich single-stranded DNA was accompanied by the endonucleolytic cleavage at sites flanking the array of G residues and G-quartets in Mn2+-dependent manner. Collectively, these results suggest that ScMre11p is likely to play a major role in generating appropriate substrates for DNA synthesis by telomerase and telomere-binding proteins. We discuss the implications of these findings with regard to telomere length maintenance by telomerase-dependent and independent mechanisms.