MGME1, also known as Ddk1 or C20orf72, is a mitochondrial exonuclease found to be involved in the processing of mitochondrial DNA (mtDNA) during replication. Here, we present detailed insights on the role of MGME1 in mtDNA maintenance. Upon loss of MGME1, elongated 7S DNA species accumulate owing to incomplete processing of 5′ ends. Moreover, an 11-kb linear mtDNA fragment spanning the entire major arc of the mitochondrial genome is generated. In contrast to control cells, where linear mtDNA molecules are detectable only after nuclease S1 treatment, the 11-kb fragment persists in MGME1-deficient cells. In parallel, we observed characteristic mtDNA duplications in the absence of MGME1. The fact that the breakpoints of these mtDNA rearrangements do not correspond to either classical deletions or the ends of the linear 11-kb fragment points to a role of MGME1 in processing mtDNA ends, possibly enabling their repair by homologous recombination. In agreement with its functional involvement in mtDNA maintenance, we show that MGME1 interacts with the mitochondrial replicase PolgA, suggesting that it is a constituent of the mitochondrial replisome, to which it provides an additional exonuclease activity. Thus, our results support the viewpoint that MGME1-mediated mtDNA processing is essential for faithful mitochondrial genome replication and might be required for intramolecular recombination of mtDNA.