The sequence specificity of the recombination activating gene (RAG) complex during V(D)J recombination has been well studied. RAGs can also act as structure-specific nuclease; however, little is known about the mechanism of its action. Here, we show that in addition to DNA structure, sequence dictates the pattern and efficiency of RAG cleavage on altered DNA structures. Cytosine nucleotides are preferentially nicked by RAGs when present at single-stranded regions of heteroduplex DNA. Although unpaired thymine nucleotides are also nicked, the efficiency is many fold weaker. Induction of single- or double-strand breaks by RAGs depends on the position of cytosines and whether it is present on one or both of the strands. Interestingly, RAGs are unable to induce breaks when adenine or guanine nucleotides are present at single-strand regions. The nucleotide present immediately next to the bubble sequence could also affect RAG cleavage. Hence, we propose "C((d))C((S))C((S))" (d, double-stranded; s, single-stranded) as a consensus sequence for RAG-induced breaks at single-/double-strand DNA transitions. Such a consensus sequence motif is useful for explaining RAG cleavage on other types of DNA structures described in the literature. Therefore, the mechanism of RAG cleavage described here could explain facets of chromosomal rearrangements specific to lymphoid tissues leading to genomic instability.