We have purified a cruciform DNA resolving endonuclease (Endo X3) greater than 1000-fold from crude extracts of mitotically growing Saccharomyces cerevisiae. The enzyme shows high specificity for DNAs with secondary structures and introduces characteristic patterns of staggered 'nicks' in the immediate vicinity of the structure. The following substrates were analyzed in detail: (i) naturally occurring four-way X junctions in cruciform DNA of a supercoiled plasmid; (ii) synthetic four-way X junctions with arms of 9 bp; (iii) synthetic three-way Y junctions with arms of 10 bp; and (iv) heteroduplex loops with 19 nucleotides in the loop. Cleavages were always found in the double stranded portion of the DNA, located immediately adjacent to the junction of the respective structure. The Endo X3 induced cleavage patterns are identical or very similar to the cleavage patterns induced in the same substrates by endonuclease VII (Endo VII) from phage T4. Furthermore, the activity of Endo X3 is completely inhibited in the presence of anti-Endo VII antiserum. Endo X3 has an apparent mol. wt of 43,000 daltons, determined by gel filtration and of approximately 18,000 daltons in SDS--polyacrylamide gels. Maximum activity of the enzyme was obtained in the presence of 10 mM MgCl2 at 31 degrees C in Tris-HCl buffer over a broad pH range with a maximum approximately 8.0. About 70% of maximal activity was obtained when Mg2+ was replaced by equimolar amounts of Mn2+ or Ca2+.