Uracil in DNA may arise by cytosine deamination or thymine replacement and is removed during DNA repair. Fruitfly larvae lack two repair enzymes, the major uracil-DNA glycosylase and dUTPase, and may accumulate uracil-DNA. We asked if larval tissues contain proteins that specifically recognize uracil-DNA. We show that the best hit of pull-down on uracil-DNA is the protein product of the Drosophila melanogaster gene CG18410. This protein binds to both uracil-DNA and normal DNA but degrades only uracil-DNA; it is termed Uracil-DNA Degrading Factor (UDE). The protein has detectable homology only to a group of sequences present in genomes of pupating insects. It is under detection level in the embryo, most of the larval stages and in the imago, but is strongly upregulated right before pupation. In Schneider 2 cells, UDE mRNA is upregulated by ecdysone. UDE represents a new class of proteins that process uracil-DNA with potential involvement in metamorphosis.