Werner syndrome (WS) is a rare late-onset premature ageing disease showing many of the phenotypes associated with normal ageing, and provides one of the best models for investigating cellular pathways that lead to normal ageing. WS is caused by mutation of WRN, which encodes a multifunctional DNA replication and repair helicase/exonuclease. To investigate the role of WRN protein’s unique exonuclease domain, we have recently identified DmWRNexo, the fly orthologue of the exonuclease domain of human WRN. Here, we fully characterise DmWRNexo exonuclease activity in vitro, confirming 3′–5′ polarity, demonstrating a requirement for Mg2+, inhibition by ATP, and an ability to degrade both single-stranded DNA and duplex DNA substrates with 3′ or 5′ overhangs, or bubble structures, but with no activity on blunt ended DNA duplexes. We report a novel active site mutation that ablates enzyme activity. Lesional substrates containing uracil are partially cleaved by DmWRNexo, but the enzyme pauses on such substrates and is inhibited by abasic sites. These strong biochemical similarities to human WRN suggest that Drosophila can provide a valuable experimental system for analysing the importance of WRN exonuclease in cell and organismal ageing.Electronic supplementary materialThe online version of this article (doi:10.1007/s11357-012-9411-0) contains supplementary material, which is available to authorized users.