TREX1 is a potent 3' → 5' exonuclease that degrades single- and double-stranded DNA (ssDNA and dsDNA). TREX1 mutations at amino acid positions Asp-18 and Asp-200 in familial chilblain lupus and Aicardi-Goutières syndrome elicit dominant immune dysfunction phenotypes. Failure to appropriately disassemble genomic DNA during normal cell death processes could lead to persistent DNA signals that trigger the innate immune response and autoimmunity. We tested this concept using dsDNA plasmid and chromatin and show that the TREX1 exonuclease locates 3' termini generated by endonucleases and degrades the nicked DNA polynucleotide. A competition assay was designed using TREX1 dominant mutants and variants to demonstrate that an intact DNA binding process, coupled with dysfunctional chemistry in the active sites, explains the dominant phenotypes in TREX1 D18N, D200N, and D200H alleles. The TREX1 residues Arg-174 and Lys-175 positioned adjacent to the active sites act with the Arg-128 residues positioned in the catalytic cores to facilitate melting of dsDNA and generate ssDNA for entry into the active sites. Metal-dependent ssDNA binding in the active sites of the catalytically inactive dominant TREX1 mutants contributes to DNA retention and precludes access to DNA 3' termini by active TREX1 enzyme. Thus, the dominant disease genetics exhibited by the TREX1 D18N, D200N, and D200H alleles parallel precisely the biochemical properties of these TREX1 dimers during dsDNA degradation of plasmid and chromatin DNA in vitro. These results support the concept that failure to degrade genomic dsDNA is a principal pathway of immune activation in TREX1-mediated autoimmune disease.