Primer extension studies have shown that the Y-family DNA polymerase IV (Dpo4) from Sulfolobus solfataricus P2 can preferentially insert C opposite N-(deoxyguanosin-8-yl)-2-acetylaminofluorene (AAF-dG) [F. Boudsocq, S. Iwai, F. Hanaoka and R. Woodgate (2001) Nucleic Acids Res., 29, 4607-4616]. Our goal is to elucidate on a structural level how AAF-dG can be harbored in the Dpo4 active site opposite an incoming dCTP, using molecular modeling and molecular dynamics simulations, since AAF-dG prefers the syn glycosidic torsion. Both anti and syn conformations of the templating AAF-dG in a Dpo4 ternary complex were investigated. All four dNTPs were studied. We found that an anti glycosidic torsion with C1'-exo deoxyribose conformation allows AAF-dG to be Watson-Crick hydrogen-bonded with dCTP with modest polymerase perturbation, but other nucleotides are more distorting. The AAF is situated in the Dpo4 major groove open pocket with fluorenyl rings 3'- and acetyl 5'-directed along the modified strand, irrespective of dNTP. With AAF-dG syn, the fluorenyl rings are in the small minor groove pocket and the active site region is highly distorted. The anti-AAF-dG conformation with C1'-exo sugar pucker can explain the preferential incorporation of dC by Dpo4. Possible relevance of our new major groove structure for AAF-dG to other polymerases, lesion repair and solution conformations are discussed.