DNA polymerase θ (Polθ) is a unique polymerase-helicase fusion protein that promotes microhomology-mediated end-joining (MMEJ) of DNA double-strand breaks (DSBs). How full-length human Polθ performs MMEJ at the molecular level remains unknown. Using a biochemical approach, we find that the helicase is essential for Polθ MMEJ of long ssDNA overhangs which model resected DSBs. Remarkably, Polθ MMEJ of ssDNA overhangs requires polymerase-helicase attachment, but not the disordered central domain, and occurs independently of helicase ATPase activity. Using single-particle microscopy and biophysical methods, we find that polymerase-helicase attachment promotes multimeric gel-like Polθ complexes that facilitate DNA accumulation, DNA synapsis, and MMEJ. We further find that the central domain regulates Polθ multimerization and governs its DNA substrate requirements for MMEJ. These studies identify unexpected functions for the helicase and central domain and demonstrate the importance of polymerase-helicase tethering in MMEJ and the structural organization of Polθ.