GIY-YIG homing endonucleases are modular enzymes consisting of a well-defined N-terminal catalytic domain connected to a variable C-terminal DNA-binding domain. Previous studies have revealed that the role of the DNA-binding domain is to recognize and bind intronless DNA substrate, positioning the N-terminal catalytic domain such that it is poised to generate a staggered double-strand break by an unknown mechanism. Interactions of the N-terminal catalytic domain with intronless substrate are therefore a critical step in the reaction pathway but have been difficult to define. Here, we have taken advantage of the reduced activity of I-BmoI, an isoschizomer of the well-studied bacteriophage T4 homing endonuclease I-TevI, to examine double-strand break formation by I-BmoI. We present evidence demonstrating that I-BmoI generates a double-strand break by two sequential but chemically independent nicking reactions where divalent metal ion is a limiting factor in top-strand nicking. We also show by in-gel footprinting that contacts by the I-BmoI catalytic domain induce significant minor groove DNA distortions that occur independently of bottom-strand nicking. Bottom-strand contacts are critical for accurate top-strand nicking, whereas top-strand contacts have little influence on the accuracy of bottom-strand nicking. We discuss our results in the context of current models of GIY-YIG endonuclease function, with emphasis on the role of divalent metal ion and strand-specific contacts in regulating the activity of a single active site to generate a staggered double-strand break.