DNA polymerase mu (Pol mu) is a family X enzyme with unique substrate specificity that contributes to its specialized role in nonhomologous DNA end joining (NHEJ). To investigate Pol mu's unusual substrate specificity, we describe the 2.4 A crystal structure of the polymerase domain of murine Pol mu bound to gapped DNA with a correct dNTP at the active site. This structure reveals substrate interactions with side chains in Pol mu that differ from other family X members. For example, a single amino acid substitution, H329A, has little effect on template-dependent synthesis by Pol mu from a paired primer terminus, but it reduces both template-independent and template-dependent synthesis during NHEJ of intermediates whose 3' ends lack complementary template strand nucleotides. These results provide insight into the substrate specificity and differing functions of four closely related mammalian family X DNA polymerases.