A replication error (RER+) phenotype, characterized by somatic instability in simple repeated sequences, is associated with several types of cancer. To determine if a defect in DNA replication fidelity or repair of replication errors might explain this instability, we compared both processes in cell-free extracts from RER+ endometrial and colorectal cancer cell lines to RER- cell lines. SV40 origin-dependent replication of a microsatellite sequence is highly accurate in cell extracts regardless of their RER phenotype. However, extracts from RER+ cell lines are defective in mismatch repair, while extracts of RER- cell lines are not. Lack of repair was observed when the signal (a nick) for strand-specific repair was either 3' or 5' to the mispair. One colorectal cancer cell line contained deletions in both alleles of the putative mismatch repair gene hMSH2, and one endometrial cancer cell line contained a 4-base pair duplication in one hMSH2 allele. No hMSH2 mutation was detected in the other allele or in the other five RER+ cell lines. Repair was readily detected when each of the defective extracts was mixed with a repair-proficient extract, demonstrating that no trans-acting inhibitor is present. Attempts to complement the repair deficiencies by mixing two different defective extracts identified three combinations that restored repair. The data suggest that: (i) defective repair is associated with colorectal and endometrial cancer and, by extrapolation, with other types of cancer; (ii) mutations in the hMSH2 gene, and possibly other genes, result in defective mismatch repair; (iii) the defect(s) in these lines likely involves pre-incision events or the excision step, but not the incision, polymerization, or ligation steps; and (iv) at least four functional complementation groups for mismatch repair may be involved in human cancer.