The variable portion of the genes encoding immunoglobulins and T cell receptors are assembled from component V, D, and J DNA segments by a site-specific recombination reaction termed V(D)J recombination. V(D)J recombination is targeted to specific sites on the chromosome by recombination signal sequences (RSSs) that flank antigen receptor gene segments. The RSS consists of a conserved heptamer (consensus, 5'-CACAGTG-3') and nonamer (consensus, 5'-ACAAAAACC-3') separated by a spacer of either 12 or 23 bp. Efficient recombination occurs between a 12-RSS and a 23-RSS, a restriction known as the 12/23 rule.

V(D)J recombination can be divided into two phases, DNA cleavage and DNA joining. DNA cleavage requires two lymphocyte-specific factors, the products of the recombination activating genes, RAG1 and RAG2, which together recognize the RSSs and create double strand breaks at the RSS-coding segment junctions [PMID:11961538]. RAG-mediated DNA cleavage occurs in a synaptic complex termed the paired complex, which is constituted from two distinct RSS-RAG complexes, a 12-SC and a 23-SC (where SC stands for signal complex). The DNA cleavage reaction involves two distinct enzymatic steps, initial nicking that creates a 3'-OH between a coding segment and its RSS, followed by hairpin formation in which the newly created 3'-OH attacks a phosphodiester bond on the opposite DNA strand. This generates a blunt, 5' phosphorylated signal end containing all of the RSS elements, and a covalently sealed hairpin coding end.

The second phase of V(D)J recombination, in which broken DNA fragments are processed and joined, is less well characterized. Signal ends are typically joined precisely to form a signal joint, whereas joining of the coding ends requires the hairpin structure to be opened and typically involves nucleotide addition and deletion before formation of the coding joint. The factors involved in these processes include ubiquitously expressed proteins involved in the repair of DNA double strand breaks by nonhomologous end joining, terminal deoxynucleotidyl transferase, and Artemis protein.

In addition to their critical roles in RSS recognition and DNA cleavage, the RAG proteins may perform two distinct types of functions in the postcleavage phase of V(D)J. A structural function has been inferred from the finding that, after DNA cleavage in vitro, the DNA ends remain associated with the RAG proteins in a "four end" complex known as the cleaved signal complex. After release of the coding ends in vitro, and after coding joint formation in vivo, the RAG proteins remain in a stable signal end complex (SEC) containing the two signal ends. These postcleavage complexes may serve as essential scaffolds for the second phase of the reaction, with the RAG proteins acting to organize the DNA processing and joining events.

The second type of RAG protein-mediated postcleavage activity is the catalysis of phosphodiester bond hydrolysis and strand transfer reactions. The RAG proteins are capable of opening hairpin coding ends in vitro. The RAG proteins also show 3' flap endonuclease activity that may contribute to coding end processing/joining and can utilize the 3' OH group on the signal ends to attack hairpin coding ends (forming hybrid or open/shut joints) or virtually any DNA duplex (forming a transposition product).