A phosphodiesterase (EC 3.1.4.1) was purified to homogeneity from the fruit body of Flammulina velutipes. The enzyme had considerable activity toward oligonucleotides. The Km values were 0.66 mM for ApA, 2.47 mM for (Ap)2A, and 3.03 mM for (Ap)3A. The enzyme hydrolyzed oligodeoxyribonucleotides as well as oligoribonucleotides. The oligoribonucleotides bearing a phosphate residue at the 3' end were not hydrolyzed by the enzyme. The enzyme hydrolyzed the oligoribonucleotides exonucleolytically from the 3' to 5' end. Thus the PDase of F. velutipes is considered to function in vivo as an oligonucleotidase (EC 3.1.13.3), which efficiently converts oligonucleotides to 5'-mononucleotides in the cell.