Homing endonucleases stimulate gene conversion by generating site-specific DNA double-strand breaks that are repaired by homologous recombination. These enzymes are potentially valuable tools for targeted gene correction and genome engineering. We have engineered a variant of the I-AniI homing endonuclease that nicks its cognate target site. This variant contains a mutation of a basic residue essential for proton transfer and solvent activation in one active site. The cleavage mechanism, DNA-binding affinity, and substrate specificity profile of the nickase are similar to the wild-type enzyme. I-AniI nickase stimulates targeted gene correction in human cells, in cis and in trans, at approximately 1/4 the efficiency of the wild-type enzyme. The development of sequence-specific nicking enzymes like the I-AniI nickase will facilitate comparative analyses of DNA repair and mutagenesis induced by single- or double-strand breaks.