MutL proteins are ubiquitous and play important roles in DNA metabolism. MutLγ (MLH1–MLH3 heterodimer) is a poorly understood member of the eukaryotic family of MutL proteins that has been implicated in triplet repeat expansion, but its action in this deleterious process has remained unknown. In humans, triplet repeat expansion is the molecular basis for ∼40 neurological disorders. In addition to MutLγ, triplet repeat expansion involves the mismatch recognition factor MutSβ (MSH2–MSH3 heterodimer). We show here that human MutLγ is an endonuclease that nicks DNA. Strikingly, incision of covalently closed, relaxed loop-containing DNA by human MutLγ is promoted by MutSβ and targeted to the strand opposite the loop. The resulting strand break licenses downstream events that lead to a DNA expansion event in human cell extracts. Our data imply that the mammalian MutLγ is a unique endonuclease that can initiate triplet repeat DNA expansions.