Recent experimental observations support the assumption that all families of polynucleotide polymerases have a universal "two-metal-ion" mechanism of nucleotide addition. This mechanism provides a general picture of the nucleotidyl transfer reaction. However, the detailed reaction pathway is still a matter of debate. We investigated two potential reaction pathways for DNA polymerase beta using density-functional theory. Our model consists of 67 atoms of the polymerase active site and includes all major features thought to be important for catalysis. The first mechanism we investigated involves the formation of a PO3 intermediate. This intermediate is thought to be involved in phosphate reactions in solution and could be accommodated in the polymerase beta active site. However, the barrier to formation of this intermediate is 37.0 kcal/mol, and we do not expect that this mechanism is the one that occurs in the enzyme. The second mechanism that leads to a pentacoordinated intermediate appears to be feasible. This stepwise mechanism has relatively low barriers and, after the nucleophilic attack, every step of the reaction is exothermic. The rate-limiting step of the reaction is the nucleophilic attack, which needs 13 kcal/mol of activation energy. We predict that the barrier of the corresponding transition state, which is ionic, can be further lowered by taking into account electrostatic stabilization coming from the rest of the protein.