An ATP-dependent DNAase has been purified to homogeneity from extracts of Alcaligenes faecalis, and has been shown to couple the degradation of DNA to the hydrolysis of ATP. Enzyme activity also requires divalent ions, with Mn2+, Mg2+ and Co2+ being effective cofactors for both DNAase and ATPase activities. We have studied the intermediates formed by the enzyme during the degradation of duplex DNA with each of these cofactors using sedimentation velocity, binding to nitrocellulose filters and sensitivity to a nuclease specific for single-stranded DNA. With Mn2+ or Co2+, the enzyme acts processively to produce mostly acid-soluble material and acid-insoluble single-strand fragments up to 400-nucleotides long. However, with Mg2+ present, the enzyme produces intermediates comprising a duplex region with one or more single-strand tails, while little acid-soluble oligonucleotide is formed. From these results, we propose a model to describe the mechanism by which the ATP-dependent DNAase from A. faecalis degrades duplex DNA.