Cancers may develop in the background of genomic instability with accumulated mutations. Helicobacter pylori gastritis is characterized by acute foveolitis of the proliferative zone, which is found in any stage of the gastritis as long as the infection persists. Because acute foveolitis targets specifically the proliferative zone of pits, the proliferating epithelial cells are under severe and persistent mutagenic pressure. In H. pylori gastritis, a characteristic morphological change of epithelial cells, the malgun (clear) cell change is frequently present in association with acute foveolitis. Malgun cells have enlarged euchromatic nuclei and abundant cytoplasm. The expression of proliferating cell nuclear antigen and cytokeratin 8 are typically up-regulated in them indicating that they are mitotically and metabolically active. Here, we report evidence for DNA damage and repair in malgun cells. Significant double-strand DNA breaks were shown by the consistent terminal dUTP nick-end labeling in the nuclei of malgun cells. Proteins related to DNA damage and repair, such as Ku, poly(ADP-ribosyl) polymerase, OGG1, and MSH2 were selectively up-regulated in malgun cells. Inducible nitric oxide synthase was also up-regulated. There were occasional bcl2- and p53-expressing cells suggesting that further steps of carcinogenesis took place at the single cell level. Our results suggest that the malgun cell change represents a characteristic morphological sign of cellular genomic damage and repair, and may be implicated in an early stage of carcinogenesis. It is suggested that acute foveolitis of the proliferative zone is a major pathogenetic step of gastric carcinogenesis in H. pylori gastritis.