Microsatellite instability (MSI) is a form of genetic instability caused by alterations in the DNA mismatch repair system. Approximately 15% of colorectal cancers display MSI due to a germline mutation in one of the mismatch repair genes (MLH1, MSH2, MSH6 and PMS2) or to epigenetic silencing of MLH1. Colorectal cancers with MSI have distinctive features, including a tendency to arise in the proximal colon, poor differentiation, lymphocytic infiltration and mucinous or signet-ring histology. Patients with MSI tumors appear to have a better prognosis than those with microsatellite stable tumors, but curiously the responses to 5-fluorouracil-based chemotherapy regimens are poorer with MSI tumors. Preliminary data suggest possible advantages of irinotecan-based regimens, but these findings need validation in well-designed clinical trials.