Transposons comprise large fractions of eukaryotic genomes and provide genetic reservoirs for the evolution of new cellular functions. We identified TPB2, a homolog of the piggyBac transposase gene that is required for programmed DNA deletion in Tetrahymena. TPB2 was expressed exclusively during the time of DNA excision, and its encoded protein Tpb2p was localized in DNA elimination heterochromatin structures. Notably, silencing of TPB2 by RNAi disrupts the final assembly of these heterochromatin structures and prevents DNA deletion to occur. In vitro studies revealed that Tpb2p is an endonuclease that produces double-strand breaks with four-base 5' protruding ends, similar to the ends generated during DNA deletion. These findings suggest that Tpb2p plays a key role in the assembly of specialized DNA elimination chromatin architectures and is likely responsible for the DNA cleavage step of programmed DNA deletion.