The most detrimental responses of the UV-exposed skin are triggered by cyclobutane pyrimidine dimers (CPDs). Although placental mammals rely solely on nucleotide excision repair (NER) to eliminate CPDs, none of the core NER factors are apparently able to distinguish this hazardous lesion from native DNA, raising the question of how CPDs are circumscribed to define correct excision boundaries. A key NER intermediate involves unwinding of the damaged duplex by transcription factor TFIIH, a reaction that requires xeroderma pigmentosum group D (XPD) protein. This study was prompted by the observation that the ATPase/helicase activity of XPD is necessary for an effective anchoring of this subunit to UV lesions in mammalian nuclei. The underlying mechanism by which XPD impinges on damaged DNA has been probed with a monomeric archaeal homolog, thus revealing that the collision with a single CPD inhibits the helicase but stimulates its ATPase activity. Restriction and glycosylase protection assays show that the XPD helicase remains firmly bound to a CPD situated in the translocated strand along which the enzyme moves with 5'-3' polarity. Competition assays confirm that a stable complex is formed when the XPD helicase encounters a CPD in the translocated strand. Instead, the enzyme dissociates from the substrate after running into a CPD in the complementary 3'-5' strand. These results disclose a damage verification and demarcation process that takes place by strand-selective immobilization of the XPD helicase and its conversion to a site-specific ATPase at DNA lesions.