RAG1 and RAG2 catalyze the first DNA cleavage steps in V(D)J recombination. We demonstrate that the isolated central domain of RAG1 has inherent single-stranded (ss) DNA cleavage activity, which does not require, but is enhanced by, RAG2. The central domain, therefore, contains the active-site residues necessary to perform hydrolysis of the DNA phosphodiester backbone. Furthermore, the catalytic activity of this domain on ss DNA is abolished by addition of the C-terminal domain of RAG1. The inhibitory effects of this latter domain are suppressed on substrates containing double-stranded (ds) DNA. Together, the activities of the reconstituted domains on ss versus mixed ds-ss DNA approximate the activity of intact RAG1 in the presence of RAG2. We propose how the combined actions of the RAG1 domains may function in V(D)J recombination and also in aberrant cleavage reactions that may lead to genomic instability in B and T lymphocytes.