The gene product of XRCC4 has been implicated in both V(D)J recombination and the more general process of double strand break repair (DSBR). To date its role in these processes is unknown. Here, we describe biochemical characteristics of the murine XRCC4 protein. XRCC4 expressed in insect cells exists primarily as a disulfide-linked homodimer, although it can also form large multimers. Recombinant XRCC4 is phosphorylated during expression in insect cells. XRCC4 phosphorylation in Sf9 cells occurs on serine, threonine, and tyrosine residues. We also investigated whether XRCC4 interacts with the other factor known to be requisite for both V(D)J recombination and DSBR, the DNA-dependent protein kinase. We report that XRCC4 is an efficient in vitro substrate of DNA-PK and another unidentified serine/ threonine protein kinase(s). Both DNA-PK dependent and independent phosphorylation of XRCC4 in vitro occurs only on serine and threonine residues within the COOH-terminal 130 amino acids, a region of the molecule that is not absolutely required for XRCC4's DSBR function. Finally, recombinant XRCC4 facilitates Ku binding to DNA, promoting assembly of DNA-PK and complexing with DNA-PK bound to DNA. These data are consistent with the hypothesis that XRCC4 functions as an alignment factor in the DNA-PK complex.