Yes, undo is a Scrabble word!
...and is worth 5 points in Scrabble, and 7 points in Words with Friends
undo
Verb
1. Cancel, annul, or reverse an action or its effect
2. Deprive of certain characteristics
3. Cause the ruin or downfall of
4. Cause to become loose
5. Remove the outer cover or wrapping of
What Scrabble words can I make with the letters in undo?
4 Letter Words
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3 Letter Words
2 Letter Words