Has DNA hydrolytic activity. Is capable of both single- and double-stranded DNA cleavage, producing DNA fragments with 3'-OH ends. Can cleave chromatin to nucleosomal units and cleaves nucleosomal and liposome-coated DNA. Acts in internucleosomal DNA fragmentation (INDF) during apoptosis and necrosis. The role in apoptosis includes myogenic and neuronal differentiation, and BCR-mediated clonal deletion of self-reactive B cells. Is active on chromatin in apoptotic cell-derived membrane-coated microparticles and thus suppresses anti-DNA autoimmunity. Together with DNASE1, plays a key role in degrading neutrophil extracellular traps (NETs). NETs are mainly composed of DNA fibers and are released by neutrophils to bind pathogens during inflammation. Degradation of intravascular NETs by DNASE1 and DNASE1L3 is required to prevent formation of clots that obstruct blood vessels and cause organ damage following inflammation.