By replicating damaged nucleotides, error-prone DNA translesion synthesis (TLS) enables the completion of replication, albeit at the expense of fidelity. TLS of helix-distorting DNA lesions, that usually have reduced capacity of basepairing, comprises insertion opposite the lesion followed by extension, the latter in particular by polymerase ζ (Pol ζ). However, little is known about involvement of Pol ζ in TLS of non- or poorly-distorting, but miscoding, lesions such as O6-methyldeoxyguanosine (O6-medG). Using purified Pol ζ we describe that the enzyme can misincorporate thymidine opposite O6-medG and efficiently extend from terminal mismatches, suggesting its involvement in the mutagenicity of O6-medG. Surprisingly, O6-medG lesions induced by the methylating agent N-methyl-N’-nitro-N-nitrosoguanidine (MNNG) appeared more, rather than less, mutagenic in Pol ζ-deficient mouse embryonic fibroblasts (MEFs) than in wild type MEFs. This suggested that in vivo Pol ζ participates in non-mutagenic TLS of O6-medG. However, we found that the Pol ζ-dependent misinsertions at O6-medG lesions are efficiently corrected by DNA mismatch repair (MMR), which masks the error-proneness of Pol ζ. We also found that the MNNG-induced mutational signature is determined by the adduct spectrum, and modulated by MMR. The signature mimicked single base substitution signature 11 in the catalogue of somatic mutations in cancer, associated with treatment with the methylating drug temozolomide. Our results unravel the individual roles of the major contributors to methylating drug-induced mutagenesis. Moreover, these results warrant caution as to the classification of TLS as mutagenic or error-free based on in vitro data or on the analysis of mutations induced in MMR-proficient cells.