As an emerging class of metal nanoclusters, oligonucleotide-stabilized silver nanoclusters (DNA–Ag NCs) show a number of applications in biosensing and bionanotechnology. Herein, we develop a label-free DNA sensor based on DNA–Ag NCs and exonuclease III (Exo III)-catalyzed target recycling amplification. The fluorescence of single-strand DNA-stabilized Ag NCs can be enhanced through hybridization with the guanine-rich DNA. With the addition of target DNA, the fluorescence intensity decreases comparable with that of DNA duplex-stabilized Ag NCs, which is attributed to the competitive hybridization reaction. With the addition of Exo III, the fluorescence intensity decreases more obviously. The calibration range for target DNA is 0.3 to 30 nM, and the detection limit is 0.2 nM. The sensor offers 100-fold improvement in detection sensitivity compared with that obtained without Exo III. The proposed strategy also shows excellent selectivity, which can differentiate between perfectly matched and mismatched target DNA. Therefore, the strategy presents a promising platform for DNA detection with high sensitivity and selectivity.