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Uracil is present in small amounts in DNA due to spontaneous deamination of cytosine and incorporation of dUMP during replication. While deamination generates mutagenic U:G mismatches, incorporated dUMP results in U:A pairs that are not directly mutagenic, but may be cytotoxic. In most cells, mutations resulting from uracil in DNA are prevented by error-free base excision repair. However, in B-cells uracil in DNA is also a physiological intermediate in acquired immunity. Here, activation-induced cytosine deaminase (AID) introduces template uracils that give GC to AT transition mutations in the Ig locus after replication. When uracil–DNA glycosylase (UNG2) removes uracil, error-prone translesion synthesis over the abasic site causes other mutations in the Ig locus. Together, these processes are central to somatic hypermutation (SHM) that increases immunoglobulin diversity. AID and UNG2 are also essential for generation of strand breaks that initiate class switch recombination (CSR). Patients lacking UNG2 display a hyper-IgM syndrome with recurrent infections, increased IgM, strongly decreased IgG, IgA and IgE and skewed SHM. UNG2 is also involved in innate immune response against retroviral infections. Ung−/− mice have a similar phenotype and develop B-cell lymphomas late in life. However, there is no evidence indicating that UNG deficiency causes lymphomas in humans.