The RAG1/2 endonuclease initiates programmed DNA rearrangements in progenitor lymphocytes by generating double-strand breaks at specific recombination signal sequences. This process, known as V(D)J recombination, assembles the vastly diverse antigen receptor genes from numerous V, D, and J coding segments. In vitro biochemical and cellular transfection studies suggest that RAG1/2 may also play postcleavage roles by forming complexes with the recombining ends to facilitate DNA end processing and ligation. In the current study, we examine the in vivo consequences of a mutant form of RAG1, RAG1-S723C, that is proficient for DNA cleavage, yet exhibits defects in postcleavage complex formation and end joining in vitro. We generated a knockin mouse model harboring the RAG1-S723C hypomorphic mutation and examined the immune system in this fully in vivo setting. RAG1-S723C homozygous mice exhibit impaired lymphocyte development and decreased V(D)J rearrangements. Distinct from RAG nullizygosity, the RAG1-S723C hypomorph results in aberrant DNA double-strand breaks within rearranging loci. RAG1-S723C also predisposes to thymic lymphomas associated with chromosomal translocations in a p53 mutant background, and heterozygosity for the mutant allele accelerates age-associated immune system dysfunction. Thus, our study provides in vivo evidence that implicates aberrant RAG1/2 activity in lymphoid tumor development and premature immunosenescence.