We provide evidence that the human DNA ligase III gene encodes a mitochondrial form of this enzyme. First, the DNA ligase III cDNA contains an in-frame ATG located upstream from the putative translation initiation start site. The DNA sequence between these two ATG sites encodes an amphipathic helix similar to previously identified mitoehondrial targeting peptides. Second, recombinant green fluorescent protein harboring this sequence at its amino terminus was efficiently targeted to the mitochondria of Cos-1 monkey kidney cells. In contrast, native green fluorescent protein distributed to the cytosol. Third, a series of hemagglutinin-DNA ligase III minigene constructs were introduced into Cos-1 cells, and immunocytochemistry was used to determine subcellular localization of the epitope-tagged DNA ligase III protein. These experiments revealed that inactivation of the upstream ATG resulted in nuclear accumulation of the DNA ligase III protein, whereas inactivation of the downstream ATG abolished nuclear localization and led to accumulation within the mitochondrial compartment. Fourth, mitochondrial protein extracts prepared from human cells overexpressing antisense DNA ligase III mRNA possessed substantially less DNA ligase activity than did mitochondrial extracts prepared from control cells. DNA end-joining activity was also substantially reduced in extracts prepared from antisense mRNA- expressing cells. From these results, we conclude that the human DNA ligase III gene encodes both nuclear and mitochondrial enzymes. DNA ligase plays a central role in DNA replication, recombination, and DNA repair. Thus, identification of a mitochondrial form of this enzyme provides a tool with which to dissect mammalian mitochondrial genome dynamics.