5'->3' double-stranded DNA exonuclease which may also possess a cryptic 3'->5' double-stranded DNA exonuclease activity. Functions in DNA mismatch repair (MMR) to excise mismatch-containing DNA tracts directed by strand breaks located either 5' or 3' to the mismatch. Also exhibits endonuclease activity against 5'-overhanging flap structures similar to those generated by displacement synthesis when DNA polymerase encounters the 5'-end of a downstream Okazaki fragment. Required for somatic hypermutation (SHM) and class switch recombination (CSR) of immunoglobulin genes. Essential for male and female meiosis. Binds 2 magnesium ions per subunit. They probably participate in the reaction catalyzed by the enzyme. May bind an additional third magnesium ion after substrate binding. Interacts with the MLH1-PMS2 heterodimer via MLH1. Interacts with MSH3. Interacts with the MSH2-MSH6 heterodimer via MSH2, and this interaction may increase the processivity of the 5'->3' exonuclease activity. Interacts with PCNA, and this interaction may both stimulate the cryptic 3'->5' exonuclease activity and suppress the 5'->3' exonuclease activity. Interacts with WRN, and this interaction stimulates both the 5'->3' exonuclease activity and cleavage of 5'-overhanging flap structures. Interacts with RECQL/RECQ1, and this interaction stimulates cleavage of 5'-overhanging flap structures (By similarity). Colocalizes with PCNA to discrete nuclear foci in S-phase. Highly expressed in the spleen and testis. Also expressed in the bone marrow, brain, lung, lymph node and thymus. Postnatal expression in the testis is elevated at the onset of pachytene (day 14). Phosphorylated upon DNA damage and in response to agents stalling DNA replication, probably by ATM or ATR. Belongs to the XPG/RAD2 endonuclease family. EXO1 subfamily.