In eukaryotes, ribonuclease H1 (RNase H1) is involved in the processing and removal of RNA/DNA hybrids in both nuclear and mitochondrial DNA. The enzyme comprises a C-terminal catalytic domain and an N-terminal hybrid-binding domain (HBD), separated by a linker of variable length, which in Drosophila melanogaster (Dm) is exceptionally long, 115 amino acids. Molecular modeling predicted this extended linker to fold into a structure similar to the conserved HBD. We measured catalytic activity and substrate binding by EMSA and biolayer interferometry, using a deletion series of protein variants. Both the catalytic domain and the conserved HBD were required for high-affinity binding to heteroduplex substrates, whilst loss of the novel HBD led to a ~90% drop in K[cat] with a decreased K[M], and a large increase in the stability of the RNA/DNA hybrid-enzyme complex. The findings support a bipartite binding model for the enzyme, whereby the second HBD facilitates dissociation of the active site from the product, allowing for processivity. We used shotgun proteomics to identify protein partners of the enzyme involved in mediating these effects. Single-stranded DNA-binding proteins from both the nuclear and mitochondrial compartments, respectively RpA-70 and mtSSB, were prominently detected by this method. However, we were not able to document direct interactions between mtSSB and Dm RNase H1 when co-overexpressed in S2 cells, or functional interactions in vitro. Further studies are needed to determine the exact reaction mechanism of Dm RNase H1, the nature of its interaction with mtSSB and the role of the second HBD in both.