T-5-induced DNA polymerase has been shown to possess a 3' leads to 5'-exonucleolytic activity. The exonuclease acts on both native and denatured DNA, but the apparent rate of degradation of denatured DNA is about five times faster than that for native DNA. The enzyme appears to act only on 3'-OH ends and produces mainly 5'-dNMP's. Like polymerase activity, exonuclease activity shows a pH optimum around 8.6. Mg2+, dithiothreitol, and N-ethylmaleimide had identical effects on both the activities. Nicked DNA was almost totally protected from exonuclease action under synthetic conditions, i.e., in the presence of 4dNTP's. Denatured DNA was partly degraded in the early phase of incubation with 4dNTP's, presumably due to unhybridized tails at the 3'-OH primer ends. However, the exonuclease activity was operative in both cases under synthetic conditions, as evidenced by template-dependent conversion of [3H]dTTP to [3H]dTMP.