Dna2 is a nuclease/helicase with proposed roles in DNA replication, double-strand break repair and telomere maintenance. For each role Dna2 is proposed to process DNA substrates with a 5'-flap. To date, however, Dna2 has not revealed a preference for binding or cleavage of flaps over single-stranded DNA. Using DNA binding competition assays we found that Dna2 has substrate structure specificity. The nuclease displayed a strong preference for binding substrates with a 5'-flap or some variations of flap structure. Further analysis revealed that Dna2 recognized and bound both the single-stranded flap and portions of the duplex region immediately downstream of the flap. A model is proposed in which Dna2 first binds to a flap base, and then the flap threads through the protein with periodic cleavage, to a terminal flap length of ~5 nt. This resembles the mechanism of flap endonuclease 1, consistent with cooperation of these two proteins in flap processing