XPB helicase is an integral part of transcription factor TFIIH, required for both transcription initiation and nucleotide excision repair (NER). Along with the XPD helicase, XPB plays a crucial but only partly understood role in defining and extending the DNA repair bubble around lesions in NER. Archaea encode clear homologues of XPB and XPD, and structural studies of these proteins have yielded key insights relevant to the eukaryal system. Here we show that archaeal XPB functions with a structure-specific nuclease, Bax1, as a helicase-nuclease machine that unwinds and cleaves model NER substrates. DNA bubbles are extended by XPB and cleaved by Bax1 at a position equivalent to that cut by the XPG nuclease in eukaryal NER. The helicase activity of archaeal XPB is dependent on the conserved Thumb domain, which may act as the helix breaker. The N-terminal damage recognition domain of XPB is shown to be crucial for XPB-Bax1 activity and may be unique to the archaea. These findings have implications for the role of XPB in both archaeal and eukaryal NER and for the evolution of the NER pathway. XPB is shown to be a very limited helicase that can act on small DNA bubbles and open a defined region of the DNA duplex. The specialized functions of the accessory domains of XPB are now more clearly delineated. This is also the first direct demonstration of a repair function for archaeal XPB and suggests strongly that the role of XPB in transcription occurred later in evolution than that in repair.The superfamily 2 helicase XPB (Rad25 in Saccharomyces cerevisiae) is an essential component of transcription factor TFIIH. The ATPase activity of XPB is required for both nucleotide excision repair (NER) 2 and transcription initiation from RNA polymerase II promoters (1, 2). The NER pathway is a highly flexible system that is required for the detection and removal of a wide variety of bulky and helix-distorting lesions, including photoproducts. Mutations in the xpb or xpd genes in humans can cause the serious genetic diseases xeroderma pigmentosum, trichothiodystrophy, and Cockayne's syndrome, due to defects in both transcription and repair (reviewed in Ref.3). Examples of xpb mutations in humans are much more rare than those seen in the xpd gene, probably due to the crucial role of the XPB protein in basal transcription (4).Although the ATPase activities of both proteins are required for NER (5), the respective roles of the XPB and XPD helicase components of TFIIH are still a matter of debate. XPD is the more robust helicase (6), and it has been suggested to bind 5Ј of the DNA lesion and translocate in a 5Ј to 3Ј direction toward the damage site, potentially acting as a sensor or proofreader of DNA damage for the NER pathway either by jamming directly on DNA lesions (7) or perhaps through damage sensing by its iron-sulfur cluster binding domain (8, 9). However, little direct evidence exists in support of these possibilities at present, and indeed it is not yet clear whether XPD or XPB binds first at repair sites or whether they bi...