DNA polymerase beta, a member of the X family of DNA polymerases, is known to be involved in base excision repair. A key to determining the biochemical properties of this DNA polymerase is structure-function studies of site-specific mutants that result in substitution of particular amino acids at critical sites. In a previous genetic screen, we identified three 3'-azido-2',3'-dideoxythymidine 5'-triphosphate-resistant mutants, namely E249K, D246V, and R253M, of polymerase beta in the flexible loop of the palm domain. In this work, we perform an extensive kinetic analysis to investigate the role of the D246V mutant on polymerase fidelity. We find that D246V misincorporates T opposite template bases G and C. The mechanistic basis of misincorporation appears to be altered DNA positioning within the active site. We provide evidence that the fidelity of D246V is greatly affected by the base that is 5' of the templating base. We propose that the Asp residue at position 246 helps to maintain the proper positioning of the DNA within the polymerase active site and maintains the fidelity of polymerase beta. Altogether, the results suggest that the flexible loop domain of polymerase beta plays a major role in its fidelity.