The chemical mechanism of phosphodiester bond hydrolysis catalyzed by a junction-resolving enzyme has been investigated. Endonuclease I of phage T7 is a member of the nuclease superfamily of proteins that include many restriction enzymes, and the structure of the active site is very similar to that of BglI in particular. It contains three acidic amino acids that coordinate two divalent metal ions. Using mass spectrometry we have shown that endonuclease I catalyzes the breakage of the P-O3' bond, in common with restriction enzymes. We have found that the pH dependence of the hydrolysis reaction is log-linear, with a gradient of 0.9. Substitution of the scissile phosphate by an electrically neutral methylphosphonate significantly impairs the rate of bond cleavage. However, the introduction of chirally pure methylphosphonate groups shows that the effect of substitution of the proS oxygen atom is much greater than that for the proR. This is consistent with our current model of the structure of the DNA bound in the active site of endonuclease I, where the proS oxygen atom is coordinated directly to both metal ions as it is in BglI. The activity is also very sensitive to repositioning of the carboxylate groups of Asp 55 and Glu 65 in the active site, although some restoration of activity in endonuclease I E65D was observed in the presence of Mn2+ ions. A mechanism of hydrolysis consistent with all of these data is proposed.