Archaeal family B polymerases bind tightly to the deaminated bases uracil and hypoxanthine in single-stranded DNA, stalling replication on encountering these pro-mutagenic deoxynucleosides four steps ahead of the primer-template junction. When uracil is specifically bound, the polymerase-DNA complex exists in the editing rather than the polymerization conformation, despite the duplex region of the primer-template being perfectly base-paired. In this article, the interplay between the 3'-5' proofreading exonuclease activity and binding of uracil/hypoxanthine is addressed, using the family-B DNA polymerase from Pyrococcus furiosus. When uracil/hypoxanthine is bound four bases ahead of the primer-template junction (+4 position), both the polymerase and the exonuclease are inhibited, profoundly for the polymerase activity. However, if the polymerase approaches closer to the deaminated bases, locating it at +3, +2, +1 or even 0 (paired with the extreme 3' base in the primer), the exonuclease activity is strongly stimulated. In these situations, the exonuclease activity is actually stronger than that seen with mismatched primer-templates, even though the deaminated base-containing primer-templates are correctly base-paired. The resulting exonucleolytic degradation of the primer serves to move the uracil/hypoxanthine away from the primer-template junction, restoring the stalling position to +4. Thus the 3'-5' proofreading exonuclease contributes to the inability of the polymerase to replicate beyond deaminated bases.