We have previously demonstrated that the two Exonuclease III (Xth) family members present within the obligate human pathogen Neisseria meningitidis, NApe and NExo, are important for survival under conditions of oxidative stress. Of these, only NApe possesses AP endonuclease activity, while the primary function of NExo remained unclear. We now reveal further functional specialization at the level of 3'-PO(4) processing for NExo. We demonstrate that the bi-functional meningococcal glycosylases Nth and MutM can perform strand incisions at abasic sites in addition to NApe. However, no such functional redundancy exists for the 3'-phosphatase activity of NExo, and the cytotoxicity of 3'-blocking lesions is reflected in the marked sensitivity of a mutant lacking NExo to oxidative stress, compared to strains deficient in other base excision repair enzymes. A histidine residue within NExo that is responsible for its lack of AP endonuclease activity is also important for its 3'-phosphatase activity, demonstrating an evolutionary trade off in enzyme function at the single amino acid level. This specialization of two Xth enzymes for the 3'-end processing and strand-incision reactions has not previously been observed and provides a new paradigm within the prokaryotic world for separation of these critical functions during base excision repair.