POLQ is a key effector of DSB repair by microhomology-mediated end-joining (MMEJ) and is overexpressed in many cancers. POLQ inhibitors confer synthetic lethality in HR and Shieldin-deficient cancer cells, which has been proposed to reflect a critical dependence on the DSB repair pathway by MMEJ. Whether POLQ also operates independent of MMEJ remains unexplored. Here, we show that POLQ-deficient cells accumulate post-replicative ssDNA gaps upon BRCA1/2 loss or PARP inhibitor treatment. Biochemically, cooperation between POLQ helicase and polymerase activities promotes RPA displacement and ssDNA-gap fill-in, respectively. POLQ is also capable of microhomology-mediated gap skipping (MMGS), which generates deletions during gap repair that resemble the genomic scars prevalent in POLQ overexpressing cancers. Our findings implicate POLQ in mutagenic post-replicative gap sealing, which could drive genome evolution in cancer and whose loss places a critical dependency on HR for gap protection and repair and cellular viability.