Human DNA ligase III contains an N-terminal zinc finger domain that binds to nicks and gaps in DNA. This small domain has been described as a DNA nick sensor, but it is not required for DNA nick joining activity in vitro. In light of new structural information for mammalian ligases, we measured the DNA binding affinity and specificity of each domain of DNA ligase III. These studies identified two separate, independent DNA-binding modules in DNA ligase III that each bind specifically to nicked DNA over intact duplex DNA. One of these modules comprises the zinc finger domain and DNA-binding domain, which function together as a single DNA binding unit. The catalytic core of ligase III is the second DNA nick-binding module. Both binding modules are required for ligation of blunt ended DNA substrates. Although the zinc finger increases the catalytic efficiency of nick ligation, it appears to occupy the same binding site as the DNA ligase III catalytic core. We present a jackknife model for ligase III that posits conformational changes during nick sensing and ligation to extend the versatility of the enzyme.