Formation of double-strand breaks at recombination signal sequences is an early step in V (D) J recombination. Here we show that purified RAG1 and RAG2 proteins are sufficient to carry out this reaction. The cleavage reaction can be divided into two distinct steps. First, a nick is introduced at the 5’end of the signal sequence. The other strand is then broken, resulting in a hairpin structure at the coding end and a blunt, 5’-phosphorylated signal end. The hairpin is made as a direct consequence of the cleavage mechanism. Nicking and hairpin formation each require the presence of a signal sequence and both RAG proteins.