Selectively cleaves double-stranded DNA at the second phosphodiester bond 3' to a deoxyinosine leaving behind the intact lesion on the nicked DNA. Has a wide substrate spectrum. In addition to deoxyinosine-containing DNA, the enzyme cleaves DNA containing urea residues, AP sites, base mismatches, insertion/deletion mismatches, flaps, and pseudo-Y structures. Participates in the excision repair of hypoxanthine and xanthine (deaminated adenine and guanine) in DNA. It thereby reduces the mutagenic effects of nitrous acid by attacking lesions caused by nitrosative deamination (By similarity).