For more than half a century, genotoxic agents have been used to induce mutations in the genome of model organisms to establish genotype-phenotype relationships. While inaccurate replication across damaged bases can explain the formation of single nucleotide variants, it remained unknown how DNA damage induces more severe genomic alterations. Here, we demonstrate for two of the most widely used mutagens, i.e. ethyl methanesulfonate (EMS) and photo-activated trimethylpsoralen (UV/TMP), that deletion mutagenesis is the result of polymerase Theta (POLQ)-mediated end joining (TMEJ) of double strand breaks (DSBs). This discovery allowed us to survey many thousands of available C. elegans deletion alleles to address the biology of this alternative end-joining repair mechanism. Analysis of ~7,000 deletion breakpoints and their cognate junctions reveals a distinct order of events. We found that nascent strands blocked at sites of DNA damage can engage in one or more cycles of primer extension using a more downstream located break end as a template. Resolution is accomplished when 3' overhangs have matching ends. Our study provides a step-wise and versatile model for the in vivo mechanism of POLQ action, which explains the molecular nature of mutagen-induced deletion alleles.