Substantial progress has been made recently in the study of the mechanism of V(D)J recombination, prompted in large part by the development of an in-vitro system for performing the DNA cleavage portion of the reaction. It is now clear that the RAG1 and RAG2 proteins play a direct role in DNA recognition and cleavage and that both RAG proteins are required for the nicking and strand transfer steps of the cleavage reaction. The heptamer of the recombination signal is critical for precise and efficient targeting of cleavage. In contrast, the nonamer plays an important role in initial sequence specific DNA binding and is contacted directly by RAG1. In-vitro systems have been established that perform cleavage at endogenous antigen receptor loci in intact nuclei, or that perform the complete recombination reaction, suggesting that progress in the field will continue at its current rapid pace.