DNA polymerase iota (poliota) is a distributive error-prone enzyme that can incorporate nucleotides opposite a variety of DNA lesions. Further elongation is, however, either substantially inhibited or completely abolished. Here, we provide evidence that poliota can facilitate the efficient bypass of uracil and its derivatives as well as oxidized cytosine and guanine residues. The fidelity of translesion replication depends upon the lesion encountered. Correct nucleotides were inserted preferentially opposite 7,8-dihydro-8-oxoguanine (8-oxoG) and 5-hydroxycytosine (5-OHC). However, when bypassing uracil, 5-hydroxyuracil (5-OHU) or 5,6-dihydrouracil (5,6-DHU), poliota inserted T and G with a 4- to 26-fold preference over the Watson-Crick base, A. While the T:U, T:5-OHU and T:5,6-DHU mispairs were extended poorly, the G:U, G:5-OHU and G:5,6-DHU mispairs were extended with equal or greater efficiency than the correctly paired primer termini. Thus, poliota-dependent misinsertion of G opposite uracil and its derivatives may actually provide a mechanism whereby mammalian cells can decrease the mutagenic potential of lesions formed via the deamination of cytosine.