Escherichia coli RecE protein is part of the classical RecET recombination system that has recently been used in powerful new methods for genetic engineering. RecE binds to free double-stranded DNA (dsDNA) ends and processively digests the 5'-ended strand to form 5'-mononucleotides and a 3'-overhang that is a substrate for single strand annealing promoted by RecT. Here, we report the crystal structure of the C-terminal nuclease domain of RecE at 2.8 A resolution. RecE forms a toroidal tetramer with a central tapered channel that is wide enough to bind dsDNA at one end, but is partially plugged at the other end by the C-terminal segment of the protein. Four narrow tunnels, one within each subunit of the tetramer, lead from the central channel to the four active sites, which lie about 15 A from the channel. The structure, combined with mutational studies, suggests a mechanism in which dsDNA enters through the open end of the central channel, the 5'-ended strand passes through a tunnel to access one of the four active sites, and the 3'-ended strand passes through the plugged end of the channel at the back of the tetramer.