A 3'-->5' exonuclease has been highly purified from the cytosol of human acute lymphoblastic leukemia H9 cells. The apparent molecular weight of this enzyme was approximately 50,000, as indicated by its sedimentation in glycerol gradients. The exonuclease did not copurify with DNA polymerase activity, required MgCl2 for its exonucleolytic activity, and was inhibited by KCl above 60 mM. The enzyme was active on single-stranded DNA, DNA duplexes and DNA/RNA duplexes, and it was efficient at removing 3'-terminal mispairs from DNA. The products of the exonucleolytic reaction were deoxynucleoside 5'-monophosphates. The behavior of the exonuclease was examined on DNA terminated at the 3' end with a variety of dideoxynucleosides that are potent against human immunodeficiency virus type 1. The exonuclease has a broad substrate specificity; however, the rate of the enzymatic reaction varied among the D dideoxynucleosides tested (ddAMP = ddCMP > d4TMP > AZTMP). Similarly, the enzyme was examined for its reactivity with DNA terminated by either the D or L enantiomers of ddC, SddC or FddC. The removal of analogs with the native D configuration was at least 6-fold more rapid than that of the L-compounds, and the type of structural modification had an impact on the rate at which the D enantiomers were removed (SddCMP > ddCMP > FddCMP). The monophosphate forms of AZT, D4T, L-FddC and L-ddC were potent inhibitors of the exonuclease at micromolar concentrations, while D-ddCMP partially inhibited the enzyme at millimolar concentrations. Based on its physical and enzymatic properties, this exonuclease represents a novel enzyme that may have an important role in determining the relative potencies of dideoxynucleosides against human immunodeficiency virus type 1.