The genes that encode immunoglobulins and T-cell receptors must be assembled from the multiple variable (V), joining (J), and sometimes diversity (D) gene segments present in the germline loci. This process of V(D)J recombination is the major source of the immense diversity of the immune repertoire of jawed vertebrates. The recombinase that initiates the process, recombination-activating genes 1 (RAG1) and RAG2, belongs to a large family that includes transposases and retroviral integrases. RAG1/2 cleaves the DNA adjacent to the gene segments to be recombined, and the segments are then joined together by DNA repair factors. A decade of biochemical research on RAG1/2 has revealed many similarities to transposition, culminating with the observation that RAG1/2 can carry out transpositional strand transfer. Here, we discuss the parallels between V(D)J recombination and transposition, focusing specifically on the assembly of the recombination nucleoprotein complex, the mechanism of cleavage, the disassembly of post-cleavage complexes, and aberrant reactions carried out by the recombinase that do not result in successful locus rearrangement and may be deleterious to the organism. This work highlights the considerable diversity of transposition systems and their relation to V(D)J recombination.