The yeast Saccharomyces cerevisiae Sgs1 protein is a member of a family of DNA helicases that include the Escherichia coli RecQ protein and the products of human Bloom's syndrome and Werner's syndrome genes. To study the enzymatic characteristics of the protein, a recombinant Sgs1 fragment (amino acids 400-1268 of the 1447-amino acid full-length protein) was overexpressed in yeast and purified to near homogeneity. The purified protein exhibits an ATPase activity in the presence of single- or double-stranded DNA. In the presence of ATP or dATP, unwinding of duplex DNA or a DNA-RNA heteroduplex by the recombinant Sgs1 fragment was readily observed. Similar to the E. coli RecQ helicase, displacement of the DNA strand occurs in the 3' to 5' direction with respect to the single-stranded DNA flanking the duplex. The efficiency of unwinding was found to correlate inversely with the length of the duplex region and was enhanced by the presence of E. coli single-stranded DNA-binding protein. In addition, the recombinant Sgs1 fragment was found to bind more tightly to a forked DNA substrate than to either single- or double-stranded DNA.