In Saccharomyces cerevisiae, the RAD1 and RAD10 genes are involved in DNA nucleotide excision repair (NER) and in a pathway of mitotic recombination that occurs between direct repeat DNA sequences. In this paper, we show that purified Rad1 and Rad10 interact with a synthetic bubble structure and incise the DNA at the 5-side of the centrally unpaired region. When Rad1-Rad10 and purified XPG protein (the human homolog of yeast Rad2 protein) were co-incubated with the DNA substrate, we observed incisions at both ends of the bubble. This reaction mimics the dual incision step in nucleotide excision repair in vivo. In addition, the recent suggestion that Rad1 can act to resolve Holliday junctions (Habraken, Y., Sung, P., Prakash, L., and Prakash, S. (1994) Nature 371, 531-534), explaining the recombination defect observed in rad1 mutants, has been further investigated. However, using proteins purified in two different laboratories we were unable to show any interaction between Rad1 and synthetic Holliday junctions. The role that Rad1-Rad10 plays in recombination is likely to resemble its activity in NER by acting upon partially unpaired DNA intermediates such as those formed by recombination mechanisms involving single-strand DNA annealing.The process of nucleotide excision repair plays a major role in the removal of DNA lesions following DNA damage. In bacteria, excision repair is initiated by three proteins, UvrA, UvrB, and UvrC, which promote a dual incision reaction by cleaving the 3rd to 5th phosphodiester bond 3Ј to the lesion and the 8th bond at the 5Ј-side of the lesion. The 12-13-nucleotide-long oligomer containing the lesion is then removed from the DNA, and the single-stranded gap is filled and sealed by DNA polymerases and DNA ligase (1, 2). Dual incision is also observed in eukaryotes, and higher organisms excise a fragment of 27-29 nucleotides in length (3).The isolation of UV-sensitive mutants has helped to define the genetic complexity of nucleotide excision repair in Saccharomyces cerevisiae, and it is now known that many genes are involved in the process. These include RAD1, RAD2, RAD3, RAD4, RAD7, RAD10, RAD14, RAD16, RAD23, TFB1, SSL1, and SSL2 (1,4). Remarkably, the sequences of excision repair genes in yeast and mammalian cells are highly homologous, and the enzymology of the two systems is very similar. The RAD1 and RAD10 genes of S. cerevisiae encode polypeptides that interact to form a stable complex (5-7) that exhibits a structure-specific endonuclease activity. The endonuclease cleaves single-stranded DNA tails with 3Ј-ends at the junction with duplex DNA (8), indicating that Rad1-Rad10 promotes the 5Ј-incision event in NER.1 Genetic studies show that rad1 and rad10 mutants also exhibit defects in mitotic recombination (9 -14). In particular, RAD1 and RAD10 are required for intrachromosomal recombination between direct repeats and affect the integration of linear DNA molecules and circular plasmids into genomic sequences. RAD1 is also required for doublestrand break repair between two dir...