Activation-induced cytidine deaminase (AID) initiates secondary antibody diversification processes by deaminating cytidines on single-stranded DNA. AID preferentially mutates cytidines preceded by W(A/T)R(A/G) dinucleotides, a sequence specificity that is evolutionarily conserved from bony fish to humans. To uncover the biochemical mechanism of AID, we compared the catalytic and binding kinetics of AID on WRC (a hot-spot motif, where W equals A or T and R equals A or G) and non-WRC motifs. We show that although purified AID preferentially deaminates WRC over non-WRC motifs to the same degree observed in vivo, it exhibits similar binding affinities to either motif, indicating that its sequence specificity is not due to preferential binding of WRC motifs. AID preferentially deaminates bubble substrates of five to seven nucleotides rather than larger bubbles and preferentially binds to bubble-type rather than to single-stranded DNA substrates, suggesting that the natural targets of AID are either transcription bubbles or stem-loop structures. Importantly, AID displays remarkably high affinity for single-stranded DNA as indicated by the low dissociation constants and long half-life of complex dissociation that are typical of transcription factors and single-stranded DNA binding protein. These findings suggest that AID may persist on immunoglobulin and other target sequences after deamination, possibly acting as a scaffolding protein to recruit other factors.