Human DNA polymerase lambda (Pol lambda) is a family X member with low frameshift fidelity that has been suggested to perform gap-filling DNA synthesis during base excision repair and during repair of broken ends with limited homology. Here, we present a 2.1 A crystal structure of the catalytic core of Pol lambda in complex with DNA containing a two nucleotide gap. Pol lambda makes limited contacts with the template strand at the polymerase active site, and superimposition with Pol beta in a ternary complex suggests a shift in the position of the DNA at the active site that is reminiscent of a deletion intermediate. Surprisingly, Pol lambda can adopt a closed conformation, even in the absence of dNTP binding. These observations have implications for the catalytic mechanism and putative DNA repair functions of Pol lambda.