1,N-2-Etheno(epsilon) guanine is a mutagenic DNA lesion derived from lipid oxidation products and also from some chemical carcinogens. Gel electrophoretic analysis of the products of primer extension by Sulfolobus solfataricus P2 DNA polymerase IV ( Dpo4) indicated preferential incorporation of A opposite 3'-( 1, N-2-epsilon-G) TACT-5', among the four dNTPs tested individually. With the template 3'-(1,N-2-epsilon-G)CACT-5', both G and A were incorporated. When primer extension was done in the presence of a mixture of all four dNTPs, high pressure liquid chromatography-mass spectrometry analysis of the products indicated that ( opposite 3'-(1,N-2-epsilon-G) CACT-5', the major product was 5'-GTGA-3' and the minor product was 5'-AGTGA-3'. With the template 3'-(1,N-2-epsilon-G) TACT-5', the following four products were identified by high pressure liquid chromatography-mass spectrometry: 5'-AATGA-3', 5'-ATTGA-3', 5'-ATGA-3', and 5'-TGA-3'. An x-ray crystal structure of Dpo4 was solved (2.1 angstrom) with a primer-template and A placed in the primer to be opposite the 3'-(1, N-2-epsilon-G)TACT-5', in the template 3'(1,N-2-epsilon-G)TACT 5'. The added A in the primer was paired across the template T with classic Watson-Crick geometry. Similar structures were observed in a ternary Dpo4DNA-dATP complex and a ternary Dpo4-DNA-ddATP complex, with d(d)ATP opposite the template T. A similar structure was observed with a ddGTP adjacent to the primer and opposite the C next to 1,N-2-epsilon-G in 3'-(1,N-2-epsilon-G) CACT-5'. We concluded that Dpo4 uses several mechanisms, including A incorporation opposite 1, N-2-epsilon-G and also a variation of dNTP-stabilized misalignment, to generate both base pair and frameshift mutations.