The epsilon-subunit contains the catalytic site for the 3'-->5' proofreading exonuclease that functions in the DNA pol III (DNA polymerase III) core to edit nucleotides misinserted by the alpha-subunit DNA pol. A novel mutagenesis strategy was used to identify 23 dnaQ alleles that exhibit a mutator phenotype in vivo. Fourteen of the epsilon mutants were purified, and these proteins exhibited 3'-->5' exonuclease activities that ranged from 32% to 155% of the activity exhibited by the wild-type epsilon protein, in contrast with the 2% activity exhibited by purified MutD5 protein. DNA pol III core enzymes constituted with 11 of the 14 epsilon mutants exhibited an increased error rate during in vitro DNA synthesis using a forward mutation assay. Interactions of the purified epsilon mutants with the alpha- and theta;-subunits were examined by gel filtration chromatography and exonuclease stimulation assays, and by measuring polymerase/exonuclease ratios to identify the catalytically active epsilon511 (I170T/V215A) mutant with dysfunctional proofreading in the DNA pol III core. The epsilon511 mutant associated tightly with the alpha-subunit, but the exonuclease activity of epsilon511 was not stimulated in the alpha-epsilon511 complex. Addition of the theta;-subunit to generate the alpha-epsilon511-theta; DNA pol III core partially restored stimulation of the epsilon511 exonuclease, indicating a role for the theta;-subunit in co-ordinating the alpha-epsilon polymerase-exonuclease interaction. The alpha-epsilon511-theta; DNA pol III core exhibited a 3.5-fold higher polymerase/exonuclease ratio relative to the wild-type DNA pol III core, further indicating dysfunctional proofreading in the alpha-epsilon511-theta; complex. Thus the epsilon511 mutant has wild-type 3'-->5' exonuclease activity and associates physically with the alpha- and theta;-subunits to generate a proofreading-defective DNA pol III enzyme.