Lagging strand DNA replication requires the concerted actions of DNA polymerase δ, Fen1 and DNA ligase I for the removal of the RNA/DNA primers before ligation of Okazaki fragments. To better understand this process in human cells, we have reconstituted Okazaki fragment processing by the short flap pathway in vitro with purified human proteins and oligonucleotide substrates. We systematically characterized the key events in Okazaki fragment processing: the strand displacement, Pol δ/Fen1 combined reactions for removal of the RNA/DNA primer, and the complete reaction with DNA ligase I. Two forms of human DNA polymerase δ were studied: Pol δ4 and Pol δ3, which represent the heterotetramer and the heterotrimer lacking the p12 subunit, respectively. Pol δ3 exhibits very limited strand displacement activity in contrast to Pol δ4, and stalls on encounter with a 5'-blocking oligonucleotide. Pol δ4 and Pol δ3 exhibit different characteristics in the Pol δ/Fen1 reactions. While Pol δ3 produces predominantly 1 and 2 nt cleavage products irrespective of Fen1 concentrations, Pol δ4 produces cleavage fragments of 1-10 nts at low Fen1 concentrations. Pol δ3 and Pol δ4 exhibit comparable formation of ligated products in the complete system. While both are capable of Okazaki fragment processing in vitro, Pol δ3 exhibits ideal characteristics for a role in Okazaki fragment processing. Pol δ3 readily idles and in combination with Fen1 produces primarily 1 nt cleavage products, so that nick translation predominates in the removal of the blocking strand, avoiding the production of longer flaps that require additional processing. These studies represent the first analysis of the two forms of human Pol δ in Okazaki fragment processing. The findings provide evidence for the novel concept that Pol δ3 has a role in lagging strand synthesis, and that both forms of Pol δ may participate in DNA replication in higher eukaryotic cells.