The crystal structure of the catalytic core of murine terminal deoxynucleotidyltransferase (TdT) at 2.35 A resolution reveals a typical DNA polymerase beta-like fold locked in a closed form. In addition, the structures of two different binary complexes, one with an oligonucleotide primer and the other with an incoming ddATP-Co(2+) complex, show that the substrates and the two divalent ions in the catalytic site are positioned in TdT in a manner similar to that described for the human DNA polymerase beta ternary complex, suggesting a common two metal ions mechanism of nucleotidyl transfer in these two proteins. The inability of TdT to accommodate a template strand can be explained by steric hindrance at the catalytic site caused by a long lariat-like loop, which is absent in DNA polymerase beta. However, displacement of this discriminating loop would be sufficient to unmask a number of evolutionarily conserved residues, which could then interact with a template DNA strand. The present structure can be used to model the recently discovered human polymerase mu, with which it shares 43% sequence identity.