V(D)J recombination is the specialized DNA rearrangement used by cells of the immune system to assemble immunoglobulin and T-cell receptor genes from the preexisting gene segments. Because there is a large choice of segments to join, this process accounts for much of the diversity of the immune response. Recombination is initiated by the lymphoid-specific RAG1 and RAG2 proteins, which cooperate to make double-strand breaks at specific recognition sequences (recombination signal sequences, RSSs). The neighboring coding DNA is converted to a hairpin during breakage. Broken ends are then processed and joined with the help of several factors also involved in repair of radiation-damaged DNA, including the DNA-dependent protein kinase (DNA-PK) and the Ku, Artemis, DNA ligase IV, and Xrcc4 proteins, and possibly histone H2AX and the Mre11/Rad50/Nbs1 complex. There may be other factors not yet known. V(D)J recombination is strongly regulated by limiting access to RSS sites within chromatin, so that particular sites are available only in certain cell types and developmental stages. The roles of enhancers, histone acetylation, and chromatin remodeling factors in controlling accessibility are discussed. The RAG proteins are also capable of transposing RSS-ended fragments into new DNA sites. This transposition helps to explain the mechanism of RAG action and supports earlier proposals that V(D)J recombination evolved from an ancient mobile DNA element.