V(D)J recombination proceeds through a series of protein:DNA complexes mediated in part by the RAG1 and RAG2 proteins. These proteins are responsible for sequence-specific DNA recognition and DNA cleavage, and they appear to perform multiple postcleavage roles in the reaction as well. Here we review the interaction of the RAG proteins with DNA, the chemistry of the cleavage reaction, and the higher order complexes in which these events take place. We also discuss postcleavage functions of the RAG proteins, including recent evidence indicating that they initiate the process of coding end processing by nicking hairpin DNA termini. Finally, we discuss the evolutionary and functional implications of the finding that RAG1 and RAG2 constitute a transposase, and we consider RAG protein biochemistry in the context of several bacterial transposition systems. This suggests a model of the RAG protein active site in which two divalent metal ions serve alternating and opposite roles as activators of attacking hydroxyl groups and stabilizers of oxyanion leaving groups.