Mutations in the Artemis protein in humans result in hypersensitivity to DNA double-strand break-inducing agents and absence of B and T lymphocytes (radiosensitive severe combined immune deficiency [RS-SCID]). Here, we report that Artemis forms a complex with the 469 kDa DNA-dependent protein kinase (DNA-PKcs) in the absence of DNA. The purified Artemis protein alone possesses single-strand-specific 5' to 3' exonuclease activity. Upon complex formation, DNA-PKcs phosphorylates Artemis, and Artemis acquires endonucleolytic activity on 5' and 3' overhangs, as well as hairpins. Finally, the Artemis:DNA-PKcs complex can open hairpins generated by the RAG complex. Thus, DNA-PKcs regulates Artemis by both phosphorylation and complex formation to permit enzymatic activities that are critical for the hairpin-opening step of V(D)J recombination and for the 5' and 3' overhang processing in nonhomologous DNA end joining.