Dna2 is a nuclease-helicase involved in several key pathways of eukaryotic DNA metabolism. The potent nuclease activity of Saccharomyces cerevisiae Dna2 was reported to be required for all its in vivo functions tested to date. In contrast, its helicase activity was shown to be weak, and its inactivation affected only a subset of Dna2 functions. We describe here a complex interplay of the two enzymatic activities. We show that the nuclease of Dna2 inhibits its helicase by cleaving 5' flaps that are required by the helicase domain for loading onto its substrate. Mutational inactivation of Dna2 nuclease unleashes unexpectedly vigorous DNA unwinding activity, comparable with that of the most potent eukaryotic helicases. Thus, the ssDNA-specific nuclease activity of Dna2 limits and controls the enzyme's capacity to unwind dsDNA. We postulate that regulation of this interplay could modulate the biochemical properties of Dna2 and thus license it to carry out its distinct cellular functions.