Bacteria contain DNA polymerase I (PolI), a single polypeptide chain consisting of ∼930 residues, possessing DNA-dependent DNA polymerase, 3′-5′ proofreading and 5′-3′ exonuclease (also known as flap endonuclease) activities. PolI is particularly important in the processing of Okazaki fragments generated during lagging strand replication and must ultimately produce a double-stranded substrate with a nick suitable for DNA ligase to seal. PolI's activities must be highly coordinated both temporally and spatially otherwise uncontrolled 5′-nuclease activity could attack a nick and produce extended gaps leading to potentially lethal double-strand breaks. To investigate the mechanism of how PolI efficiently produces these nicks, we present theoretical studies on the dynamics of two possible scenarios or models. In one the flap DNA substrate can transit from the polymerase active site to the 5′-nuclease active site, with the relative position of the two active sites being kept fixed; while the other is that the 5′-nuclease domain can transit from the inactive mode, with the 5′-nuclease active site distant from the cleavage site on the DNA substrate, to the active mode, where the active site and substrate cleavage site are juxtaposed. The theoretical results based on the former scenario are inconsistent with the available experimental data that indicated that the majority of 5′-nucleolytic processing events are carried out by the same PolI molecule that has just extended the upstream primer terminus. By contrast, the theoretical results on the latter model, which is constructed based on available structural studies, are consistent with the experimental data. We thus conclude that the latter model rather than the former one is reasonable to describe the cooperation of the PolI's polymerase and 5′-3′ exonuclease activities. Moreover, predicted results for the latter model are presented.