The I-PpoI endonuclease is encoded by a group I intron found in the slime mold Physarum polycephalum. To initiate homing of its encoding intron, I-PpoI catalyzes a specific double-stranded break within a 15-bp recognition site. The high substrate specificities of I-PpoI and other homing endonucleases make these enzymes valuable tools for genomic mapping and sequencing. Here, we report on the ability of I-PpoI to cleave recognition sites that contain a wide variety of mutations generated randomly or deliberately. We find that much degeneracy is tolerated within the recognition site of I-PpoI. Few single substitutions prevent cleavage completely. In addition, many sites with multiple substitutions are cleaved efficiently. In contrast, deletions or insertions within the I-PpoI recognition site are detrimental to catalysis, indicating that proper registry between the protein and its substrate is critical. Finally, we find that the sequence of the flanking regions can influence catalysis by I-PpoI. Thus, I-PpoI has both the complex binding specificity of a transcription factor and the catalytic ability of a restriction endonuclease.