Xenopus laevis DNA polymerase gamma co-purifies with a tightly associated 3'----5' exonuclease. The purified enzyme lacks 5'----3' exonuclease and endonuclease activity. The ratio of the 3'----5' exonuclease activity to DNA polymerase gamma activity remains constant over the final three chromatographic procedures. In addition, these activities co-sediment under partially denaturing conditions in the presence of ethylene glycol. The associated 3'----5' exonuclease activity removes a terminally mismatched nucleotide more rapidly than a correctly base-paired 3'-terminal residue, as expected if this exonuclease has a proofreading function. The 3'----5' exonuclease has the ability to release a terminal phosphorothioated nucleotide, a property shared with T4 DNA polymerase, but not with Escherichia coli DNA polymerase I.