During B cell and T cell development, the lymphoid-specific proteins RAG-1 and RAG-2 act together to initiate the assembly of antigen receptor genes through a series of site-specific somatic DNA rearrangements that are collectively called variable-diversity-joining (V(D)J) recombination. In the past 20 years, a great deal has been learned about the enzymatic activities of the RAG-1-RAG-2 complex. Recent studies have identified several new and exciting regulatory functions of the RAG-1-RAG-2 complex. Here we discuss some of these functions and suggest that the RAG-1-RAG-2 complex nucleates a specialized subnuclear compartment that we call the 'V(D)J recombination factory'.