Schizosaccharomyces pombe ultraviolet damage endonuclease (UVDE or Uve1p) performs the initial step in an alternative excision repair pathway for UV-induced DNA damage. This DNA repair pathway was originally thought to be specific for UV damage. However, the broad substrate specificity of Uve1p suggests a more general role for this enzyme. Uve1p recognizes UV-induced bipyrimidine photoadducts and other non-UV-induced DNA adducts. Biochemical and genetic analysis also suggests that Uve1p may be involved in orchestrating mismatch repair in vivo. This study demonstrates that Uve1p recognizes and cleaves heteroduplex DNA with small unpaired loops but does not recognize loops six to eight nucleotides in length. In addition, the enzyme does not recognize DNA with palindromic insertions that could form base-paired hairpin structures. The cleavage efficiency of Uve1p depends on the distance of a mismatch from the DNA terminus, suggesting that the 3' terminus may contribute to the strand discrimination signal for Uve1p. These biochemical activities are discussed in the context of the role of Uve1p in DNA repair.