Generation of the 3' overhang is a critical event during homologous recombination (HR) repair of DNA double strand breaks. A 5'-3' nuclease, NurA, plays an important role in generating 3' single-stranded DNA during archaeal HR, together with Mre11-Rad50 and HerA. We have determined the crystal structures of apo- and dAMP-Mn(2)(+)-bound NurA from Pyrococcus furiousus (Pf NurA) to provide the basis for its cleavage mechanism. Pf NurA forms a pyramid-shaped dimer containing a large central channel on one side, which becomes narrower towards the peak of the pyramid. The structure contains a PIWI domain with high similarity to argonaute, endoV nuclease and RNase H. The two active sites, each of which contains Mn(2)(+) ion(s) and dAMP, are at the corners of the elliptical channel near the flat face of the dimer. The 3' OH group of the ribose ring is directed toward the channel entrance, explaining the 5'-3' nuclease activity of Pf NurA. We provide a DNA binding and cleavage model for Pf NurA.