Damage-specific recognition and incision of DNA during nucleotide excision repair in yeast and mammalian cells requires multiple gene products. Amino-acid sequence homology between several yeast and mammalian genes suggests that the mechanism of nucleotide excision repair is conserved in eukaryotes, but very little is known about its biochemistry. In the yeast Saccharomyces cerevisiae at least 6 genes are needed for this process, including RAD1 and RAD10 (ref. 1). Mutations in the two genes inactivate nucleotide excision repair and result in a reduced efficiency of mitotic recombinational events between repeated sequences. The Rad10 protein has a stable and specific interaction with Rad1 protein and also binds to single-stranded DNA and promotes annealing of homologous single-stranded DNA. The amino-acid sequence of the yeast Rad10 protein is homologous with that of the human excision repair gene ERCC1 (ref. 3). Here we demonstrate that a complex of purified Rad1 and Rad10 proteins specifically degrades single-stranded DNA by an endonucleolytic mechanism. This endonuclease activity is presumably required to remove non-homologous regions of single-stranded DNA during mitotic recombination between repeated sequences as previously suggested, and may also be responsible for the specific incision of damaged DNA during nucleotide excision repair.