Endonuclease VII is a Holliday-structure resolving enzyme of phage T4 which cleaves at junctions of branched DNAs and at mispairings. In extension of these findings we report the following: i) Endonuclease VII can discriminate between a large heteroduplex loop and a TT mismatch arranged in tandem, 6 nt distant from each other, in the same heteroduplex molecule. The enzyme cleaves two nucleotides 3′ from the base of the loop or the TT mismatch. ii) Similar to its reactions with mismatches cleavage of heteroduplex loops by endonucleave VII can also initiate correction of perfect double-strandedness by T4 DNA polymerase and T4 DNA-ligase in vitro . Loops of 8 nt and 20 nt were repaired efficiently. iii) For the first time endonuclease VII cleavage sites were also mapped in single-stranded DNA if it was part of the 20-nt loop. This suggests that looping of single-stranded DNA can induce formation of secondary structures, which are recognizable by endonuclease VII.