DNA damage incurred by a multitude of endogenous and exogenous factors constitutes an inevitable challenge for the replication machinery. Cells rely on various mechanisms to either remove lesions or bypass them in a more or less error-prone fashion. The latter pathway involves the Y-family polymerases that catalyze trans-lesion synthesis across sites of damaged DNA. 7,8-Dihydro-8-oxo-2'-deoxyguanosine (8-oxoG) is a major lesion that is a consequence of oxidative stress and is associated with cancer, aging, hepatitis, and infertility. We have used steady-state and transient-state kinetics in conjunction with mass spectrometry to analyze in vitro bypass of 8-oxoG by human DNA polymerase η (hpol η). Unlike the high fidelity polymerases that show preferential insertion of A opposite 8-oxoG, hpol η is capable of bypassing 8-oxoG in a mostly error-free fashion, thus preventing GC→AT transversion mutations. Crystal structures of ternary hpol η-DNA complexes and incoming dCTP, dATP, or dGTP opposite 8-oxoG reveal that an arginine from the finger domain assumes a key role in avoiding formation of the nascent 8-oxoG:A pair. That hpol η discriminates against dATP exclusively at the insertion stage is confirmed by structures of ternary complexes that allow visualization of the extension step. These structures with G:dCTP following either 8-oxoG:C or 8-oxoG:A pairs exhibit virtually identical active site conformations. Our combined data provide a detailed understanding of hpol η bypass of the most common oxidative DNA lesion.