The 3' to 5' exonuclease of calf thymus DNA polymerase delta has properties expected of a proofreading nuclease. It digests either single-stranded DNA or the single-stranded nucleotides of a mismatched primer on a DNA template by a nonprocessive mechanism. The distribution of oligonucleotide products suggests that a significant portion of the enzyme dissociates after the removal of one nucleotide. This mechanism is expected if the substrate in vivo is an incorrect nucleotide added by the polymerase. Digestion of single-stranded DNA does not proceed to completion, producing final products six to seven nucleotides long. Digestion of a long mismatched terminus accelerates when the mismatched region is reduced to less than six nucleotides. At the point of complementation, the digestion rate is greatly reduced. These results suggest that short mismatched regions are a preferred substrate. The use of a mismatched primer-template analogue, lacking the template single strand, greatly lowers digestion efficiency at the single-stranded 3'-terminus, suggesting that the template strand is important for substrate recognition. When oligonucleotides were examined for effectiveness as exonuclease inhibitors, (dG)8 was found to be the most potent inhibitor of single-stranded DNA digestion. (dG)8 was less effective at inhibiting digestion of mismatched primer termini, again suggesting that this DNA is a preferred substrate. Overall, these results indicate that the exonuclease of DNA polymerase delta efficiently removes short mismatched DNA, a structure formed from misincorporation during DNA synthesis.