Bacteriophage T4 RNase H belongs to a family of prokaryotic and eukaryotic nucleases that remove RNA primers from lagging strand fragments during DNA replication. Each enzyme has a flap endonuclease activity, cutting at or near the junction between single- and double-stranded DNA, and a 5'- to 3'-exonuclease, degrading both RNA.DNA and DNA.DNA duplexes. On model substrates for lagging strand synthesis, T4 RNase H functions as an exonuclease removing short oligonucleotides, rather than as an endonuclease removing longer flaps created by the advancing polymerase. The combined length of the DNA oligonucleotides released from each fragment ranges from 3 to 30 nucleotides, which corresponds to one round of processive degradation by T4 RNase H with 32 single-stranded DNA-binding protein present. Approximately 30 nucleotides are removed from each fragment during coupled leading and lagging strand synthesis with the complete T4 replication system. We conclude that the presence of 32 protein on the single-stranded DNA between lagging strand fragments guarantees that the nuclease will degrade processively, removing adjacent DNA as well as the RNA primers, and that the difference in the relative rates of synthesis and hydrolysis ensures that there is usually only a single round of degradation during each lagging strand cycle.