Approximately 30% of human tumors examined for mutations in polymerase beta (pol beta) appear to express pol beta variant proteins (D. Starcevic, S. Dalal, and J. B. Sweasy, Cell Cycle 3:998-1001, 2004). Many of these variants result from a single amino acid substitution. We have previously shown that the K289M and I260M colon and prostate cancer variants, respectively, induce cellular transformation most likely due to sequence-specific mutator activity (S. Dalal et al., Biochemistry 44:15664-15673, 2005; T. Lang et al., Proc. Natl. Acad. Sci. USA 101:6074-6079, 2004; J. B. Sweasy et al., Proc. Natl. Acad. Sci. USA 102:14350-14355, 2005). In the work described here, we show that the E295K gastric carcinoma pol beta variant acts in a dominant-negative manner by interfering with base excision repair. This leads to an increase in sister chromatid exchanges. Expression of the E295K variant also induces cellular transformation. Our data suggest that unfilled gaps are channeled into a homology-directed repair pathway that could lead to genomic instability. The results indicate that base excision repair is critical for maintaining genome stability and could therefore be a tumor suppressor mechanism.