The core of DNA polymerase III, the replicative polymerase in Escherichia coli, consists of three subunits (alpha, epsilon, and theta). The epsilon subunit is the 3'-5' proofreading exonuclease that associates with the polymerase (alpha) through its C-terminal region and theta through a 185-residue N-terminal domain (epsilon 186). A spectrophotometric assay for measurement of epsilon activity is described. Proteins epsilon and epsilon 186 and the epsilon 186.theta complex catalyzed the hydrolysis of the 5'-p-nitrophenyl ester of TMP (pNP-TMP) with similar values of k(cat) and K(M), confirming that the N-terminal domain of epsilon bears the exonuclease active site, and showing that association with theta has little direct effect on the chemistry occurring at the active site of epsilon. On the other hand, formation of the complex with theta stabilized epsilon 186 by approximately 14 degrees C against thermal inactivation. For epsilon 186, k(cat) = 293 min(-)(1) and K(M) = 1.08 mM at pH 8.00 and 25 degrees C, with a Mn(2+) concentration of 1 mM. Hydrolysis of pNP-TMP by epsilon 186 depended absolutely on divalent metal ions, and was inhibited by the product TMP. Dependencies on Mn(2+) and Mg(2+) concentrations were examined, giving a K(Mn) of 0.31 mM and a k(cat) of 334 min(-1) for Mn(2+) and a K(Mg) of 6.9 mM and a k(cat) of 19.9 min(-1) for Mg(2+). Inhibition by TMP was formally competitive [K(i) = 4.3 microM (with a Mn(2+) concentration of 1 mM)]. The pH dependence of pNP-TMP hydrolysis by epsilon 186, in the pH range of 6.5-9.0, was found to be simple. K(M) was essentially invariant between pH 6.5 and 8.5, while k(cat) depended on titration of a single group with a pK(a) of 7.7, approaching limiting values of 50 min(-1) at pH <6.5 and 400 min(-1) at pH >9.0. These data are used in conjunction with crystal structures of the complex of epsilon 186 with TMP and two Mn(II) ions bound at the active site to develop insights into the mechanisms of pNP-TMP hydrolysis by epsilon at high and low pH values.