In eukaryotes nucleotide excision repair of DNA damaged by ultraviolet radiation requires several gene products; defects in this process result in the cancer-prone syndrome xeroderma pigmentosum (XP) in humans. The RAD2 gene is one of at least seven genes indispensable for excision repair in the yeast Saccharomyces cerevisiae, and its encoded protein shares remarkable homology with the XP group-G gene product. Here we overproduce the RAD2-encoded protein in S. cerevisiae, purify it to near homogeneity, and show that RAD2 protein in the presence of magnesium degrades circular single-stranded DNA. The RAD2 endonuclease is specific for single-stranded DNA as it does not act on double-stranded DNA. Given the absolute requirement for RAD2 in the incision step of excision repair, our findings directly implicate RAD2 protein and its human homologue XPG protein as a catalytic component that incises the damaged DNA strand during excision repair. Furthermore, our results indicate that eukaryotes probably employ two distinct endonuclease activities to mediate the dual incision at the damage site.