The type II restriction endonuclease TseI recognizes the DNA target sequence 5'-G^CWGC-3' (where W = A or T) and cleaves after the first G to produce fragments with three-base 5'-overhangs. We have determined that it is a dimeric protein capable of cleaving not only its target sequence but also one containing A:A or T:T mismatches at the central base pair in the target sequence. The cleavage of targets containing these mismatches is as efficient as cleavage of the correct target sequence containing a central A:T base pair. The cleavage mechanism does not apparently use a base flipping mechanism as found for some other type II restriction endonuclease recognizing similarly degenerate target sequences. The ability of TseI to cleave targets with mismatches means that it can cleave the unusual DNA hairpin structures containing A:A or T:T mismatches formed by the repetitive DNA sequences associated with Huntington's disease (CAG repeats) and myotonic dystrophy type 1 (CTG repeats).