5-hydroxymethylcytosine (5hmC) has been suggested to be involved in various nucleic acid transactions and cellular processes, including transcriptional regulation, demethylation of 5-methylcytosine and stem cell pluripotency. We have identified an activity that preferentially catalyzes the cleavage of double-stranded 5hmC-modified DNA. Using biochemical methods we purified this activity from mouse liver extracts and demonstrate that the enzyme responsible for the cleavage of 5hmC-modified DNA is Endonuclease G (EndoG). We show that recombinant EndoG preferentially recognizes and cleaves a core sequence when one specific cytosine within that core sequence is hydroxymethylated. Additionally, we provide in vivo evidence that EndoG catalyzes the formation of double-stranded DNA breaks and that this cleavage is dependent upon the core sequence, EndoG and 5hmC. Finally, we demonstrate that the 5hmC modification can promote conservative recombination in an EndoG-dependent manner.