Human apurinic/apyrimidinic endonuclease (APE1) is an essential enzyme in DNA base excision repair that cuts the DNA backbone immediately adjacent to the 5' side of abasic sites to facilitate repair synthesis by DNA polymerase beta (ref. 1). Mice lacking the murine homologue of APE1 die at an early embryonic stage. Here we report that APE1 has a DNA exonuclease activity on mismatched deoxyribonucleotides at the 3' termini of nicked or gapped DNA molecules. The efficiency of this activity is inversely proportional to the gap size in DNA. In a base excision repair system reconstituted in vitro, the rejoining of nicked mismatched DNA depended on the presence of APE1, indicating that APE1 may increase the fidelity of base excision repair and may represent a new 3' mispaired DNA repair mechanism. The exonuclease activity of APE1 can remove the anti-HIV nucleoside analogues 3'-azido-3'-deoxythymidine and 2',3'-didehydro-2', 3'-dideoxythymidine from DNA, suggesting that APE1 might have an impact on the therapeutic index of antiviral compounds in this category.