An endo-exonuclease (designated nuclease III) has been purified to near homogeneity from adult flies of Drosophila melanogaster. The enzyme degrades single- and double-stranded DNA and RNA. It has a sedimentation co-efficient of 3.1S and a strokes radius of 27A The native form of the purified enzyme appears to be a monomer of 33,600 dalton. It has a pH optimum of 7-8.5 and requires Mg2+ or Mn2+ but not Ca2+ or Co2+ for its activity. The enzyme activity on double-stranded DNA was inhibited 50% by 30 mM NaCl, while its activity on single-stranded DNA required 100 mM NaCl for 50% inhibition. Under the latter conditions, its activity on double-stranded DNA was inhibited approximately 98%. The enzyme degrades DNA to complete acid soluble products which are a mixture of mono- and oligonucleotides with 5'-P and 3'-OH termini. Supercoiled DNA was converted by the enzyme to nicked and subsequently to linear forms in a stepwise fashion under the condition in which the enzyme works optimally on single-stranded DNA. The amino acid composition and amino acid sequencing of tryptic peptides from purified nuclease III is also reported.