It has been suggested that nicotinamide must be degraded during germination; however, the enzyme responsible and its physiological role have not been previously studied. We have identified an Arabidopsis gene, NIC2, that is expressed at relatively high levels in mature seed, and encodes a nicotinamidase enzyme with homology to yeast and bacterial nicotinamidases. Seed of a knockout mutant, nic2-1, had reduced nicotinamidase activity, retarded germination and impaired germination potential. nic2-1 germination was restored by after-ripening or moist chilling, but remained hypersensitive to application of nicotinamide or ABA. Nicotinamide is a known inhibitor of NAD-degrading poly(ADP-ribose) polymerases (PARP enzymes) that are implicated in DNA repair. We found reduced poly(ADP)ribosylation levels in nic2-1 seed, which were restored by moist chilling. Furthermore, nic2-1 seed had elevated levels of NAD, and germination was hypersensitive to methyl methanesulphonate (MMS), suggesting that PARP activity and DNA repair responses were impaired. We suggest that nicotinamide is normally metabolized by NIC2 during moist chilling or after-ripening, which relieves inhibition of PARP activity and allows DNA repair to occur prior to germination.