DNA polymerase θ (Pol θ) is a multifunctional enzyme with double-strand break (DSB) repair, translesion synthesis, and lyase activities. Pol θ lyase activity on ternary substrates containing a 5'-dRP that are produced during base excision repair of abasic sites (AP) is weak compared to that of DNA polymerase β (Pol β), a polymerase integrally involved in base excision repair. This led us to explore whether Pol θ utilizes its lyase activity to remove 5'-dRP and incise abasic sites from alternative substrates that might be produced during DNA damage and repair. We found that Pol θ exhibited lyase activity on abasic lesions near DSB termini and on clustered lesions. To calibrate the Pol θ activity, Pol β reactivity was examined with the same substrates. Pol β excised 5'-dRP from within a 5'-overhang 80 times faster than did Pol θ. Pol θ and Pol β also incised AP within clustered lesions but showed opposite preferences with respect to the polarity of the lesions. AP lesions in 5'-overhangs were typically excised by Pol β 35-50 times faster than those in a duplex substrate but 15-20-fold more slowly than 5'-dRP in a ternary complex. This is the first report of Pol θ exhibiting lyase activity within an unincised strand. These results suggest that bifunctional polymerases may exhibit lyase activity on a greater variety of substrates than previously recognized. A role in DSB repair could potentially be beneficial, while the aberrant activity exhibited on clustered lesions may be deleterious because of their conversion to DSBs.