Drosophila Rrp1 includes a carboxy-terminal region homologous to Escherichia coli exonuclease III which is sufficient to repair both oxidative and alkylation damage to DNA. An apurinic/apyrimidinic endonuclease activity intrinsic to Rrp1 was characterized previously. In this work, the 3'-phosphodiesterase and 3'-phosphatase activities of Rrp1 are demonstrated and characterized. Phosphoglycolate- and phosphate-modified DNA 3'-termini are formed by oxygen radical induced DNA cleavage. To demonstrate the 3'-phosphodiesterase activity of Rrp1, a 3'-phosphoglycolate-terminated oligonucleotide substrate was generated by site-specific cleavage of a unique GpC dinucleotide by iron(II) bleomycin. Removal of the terminal phosphoglycolate is detected by mobility shift on a DNA sequencing gel. Rrp1 cleaves the phosphoglycolate and releases a product with a 3'-hydroxyl terminus. Phosphoglycolate is removed more readily than the 3'-terminal dGMP residue. Rrp1 phosphodiesterase activity is not inhibited by 120 mM NaCl, while the 3'-exonuclease is reduced 25-fold. Using a 3'-phosphate-terminated oligonucleotide, the phosphatase activity of Rrp1 is at least 25-fold lower than its phosphodiesterase or apurinic endonuclease, and 56-fold lower than exonuclease III activity on the identical substrate. Rrp1 3'-phosphatase is reduced 25-fold by 80 mM NaCl. These results were confirmed using an assay that measures the ability of Rrp1 to stimulate DNA synthesis on circular DNA substrates nicked by various DNA damage treatments. In that assay, Rrp1 poorly repairs 3'-phosphate-terminated nicks introduced by micrococcal nuclease. The significance of these enzymatic properties for the biological of Rrp1 is discussed.