This article has been retracted at the request of the authors. In this article, the authors proposed that catalysis of both extension and nuclease activity could take place from the same active site of DNA polymerase θ (Pol θ). However, subsequent research from the authors’ laboratories shows that DNA synthesis by Pol θ using short GC-rich oligonucleotides can yield products that migrate more quickly on denaturing polyacrylamide gels. These arise by production of stable stem-loop structures rather than from nuclease activity. All data in the paper are sound and reproducible, but the interpretation is incorrect, as described in the accompanying letter (Carvajal et al., 2024, Mol. Cell 84, 10.1016/j.molcel.2024.03.009). Therefore, the authors have requested that the paper be retracted.