UV radiation induces two major types of DNA lesions, cyclobutane pyrimidine dimers (CPDs) and 6-4 pyrimidine-pyrimidine photoproducts, which are both primarily repaired by nucleotide excision repair (NER). Here, we investigated how chronic low-dose UV (CLUV)-induced mutagenesis occurs in rad14Δ NER-deficient yeast cells, which lack the yeast orthologue of human xeroderma pigmentosum A (XPA). The results show that rad14Δ cells have a marked increase in CLUV-induced mutations, most of which are C→T transitions in the template strand for transcription. Unexpectedly, many of the CLUV-induced C→T mutations in rad14Δ cells are dependent on translesion synthesis (TLS) DNA polymerase η, encoded by RAD30, despite its previously established role in error-free TLS. Furthermore, we demonstrate that deamination of cytosine-containing CPDs contributes to CLUV-induced mutagenesis. Taken together, these results uncover a novel role for Polη in the induction of C→T transitions through deamination of cytosine-containing CPDs in CLUV-exposed NER deficient cells. More generally, our data suggest that Polη can act as both an error-free and a mutagenic DNA polymerase, depending on whether the NER pathway is available to efficiently repair damaged templates.