DNA mismatch repair (MMR) deficiency is one of the best understood forms of genetic instability in colorectal cancer (CRC), and is characterized by the loss of function of the MMR pathway. Failure to repair replication-associated errors due to a defective MMR system allows persistence of mismatch mutations all over the genome, but especially in regions of repetitive DNA known as microsatellites, giving rise to the phenomenon of microsatellite instability (MSI). A high frequency of instability at microsatellites (MSI-H) is the hallmark of the most common form of hereditary susceptibility to CRC, known as Lynch syndrome (LS) (previously known as hereditary non-polyposis colorectal cancer syndrome), but is also observed in approximately 15-20% of sporadic colonic cancers (and rarely in rectal cancers). Tumour analysis by both MMR protein immunohistochemistry and DNA testing for MSI is necessary to provide a comprehensive picture of molecular abnormality, for use in conjunction with family history data and other clinicopathological features, in order to distinguish LS from sporadic MMR-deficient CRC. Identification of the gene targets that become mutated in MMR-deficient tumours may explain, at least in part, some of the clinical, pathological and biological features of MSI-H CRCs and holds promise for developing novel therapeutics.