In Escherichia coli K-12, the RecA- and transposase-independent precise excision of transposons is thought to be mediated by the slippage of the DNA polymerase between the two short direct repeats that flank the transposon. Inactivation of the uup gene, encoding an ATP-binding cassette (ABC) ATPase, led to an important increase in the frequency of precise excision of transposons Tn10 and Tn5 and a defective growth of bacteriophage Mu. To provide insight into the mechanism of Uup in transposon excision, we purified this protein, and we demonstrated that it is a cytosolic ABC protein. Purified recombinant Uup binds and hydrolyzes ATP and undergoes a large conformational change in the presence of this nucleotide. This change affects a carboxyl-terminal domain of the protein that displays predicted structural homology with the socalled little finger domain of Y family DNA polymerases. In these enzymes, this domain is involved in DNA binding and in the processivity of replication. We show that Uup binds to DNA and that this binding is in part dependent on its carboxyl-terminal domain. Analysis of Walker motif B mutants suggests that ATP hydrolysis at the two ABC domains is strictly coordinated and is essential for the function of Uup in vivo.