Incorporation of nucleoside analogues by the mitochondrial DNA polymerase has been implicated as the primary cause underlying many of the toxic side effects of these drugs in HIV therapy. Recent success in reconstituting recombinant human enzyme has afforded a detailed mechanistic analysis of the reactions governing nucleotide selectivity of the polymerase and the proofreading exonuclease. The toxic side effects of nucleoside analogues are correlated with the kinetics of incorporation by the mitochondrial DNA polymerase, varying over 6 orders of magnitude in the sequence zalcitabine (ddC) > didanosine (ddI metabolized to ddA) > stavudine (d4T) >> lamivudine (3TC) > tenofovir (PMPA) > zidovudine (AZT) > abacavir (metabolized to carbovir, CBV). In this review, we summarize our current efforts to examine the mechanistic basis for nucleotide selectivity by the mitochondrial DNA polymerase and its role in mitochondrial toxicity of nucleoside analogues used to treat AIDS and other viral infections. We will also discuss the promise and underlying challenges for the development of new analogues with lower toxicity.