The loss of function of WRN, a DNA helicase and exonuclease, causes the premature aging disease Werner syndrome. A hallmark feature of cells lacking WRN is genomic instability typified by elevated illegitimate recombination events and accelerated loss of telomeric sequences. In this study, the activities of WRN were examined on a displacement loop (D-loop) DNA substrate that mimics an intermediate formed during the strand invasion step of many recombinational processes. Our results indicate that this model substrate is specifically bound by WRN and efficiently disrupted by its helicase activity. In addition, the 3' end of the inserted strand of this D-loop structure is readily attacked by the 3'-->5' exonuclease function of WRN. These results indicate that D-loop structures are favored sites for WRN action. Thus, WRN may participate in DNA metabolic processes that utilize these structures, such as recombination and telomere maintenance pathways.