High-frequency microsatellite instability (MSI-H) results from deficiency in nucleotide mismatch repair. It contributes significantly to carcinogenesis in the human colorectal mucosa. Here we study 41 colorectal and three other HNPCC-related cancers with MSI-H to provide comprehensive information on the mechanisms of inactivation of the two major proteins involved, hMLH1 and hMSH2. Seventeen of the patients had family histories meeting the criteria for Bethesda grades 1, 2 or 3. Of these familial cases, 14 (83%) had early-onset disease, defined on the basis of diagnosis prior to the age of 50, but in three the disease was of late onset (>50 years). A second subset of 20 patients had early onset disease without family history. The remaining seven patients were selected to allow comparisons with sporadic, late-onset disease, the molecular basis of which has been extensively reported elsewhere. We stratified the tumours initially on the basis of hMLH1 or hMSH2 protein deficiency, detected by immunohistochemistry, and then by analysis of germline and somatic mutation, mRNA transcription, loss of heterozygosity (LOH) at the hMLH1 and hMSH2 loci, and methylation status in two regions of the hMLH1 promoter. The functional significance of several of these changes in the MSI-H tumours was confirmed by comparisons with 16 tumours with low-frequency microsatellite instability and 56 tumours with stable microsatellites. As anticipated, patients with family histories usually showed germline mutation of hMSH2 or hMLH1. In many cases the residual normal allele was silenced in their tumours by loss of heterozygosity (LOH). The small subset of late-onset, sporadic cases confirmed the preponderance in this group of biallelic hMLH1 promoter methylation. In the early-onset, apparently sporadic subset there were 11 tumours with hMLH1 deficiency, five with hMSH2 deficiency and four with no detectable abnormality in expression of either protein. These showed a complex mixture of lesions, including germline and somatic mutations, promoter methylation, LOH, suppression of wild-type RNA by as yet undiscovered mechanisms, or no detectable abnormality in any of these parameters. Evidence is presented to indicate that methylation in proximal region of the hMLH1 promoter is a more reliable correlate of transcriptional silencing in colorectal cancers than methylation in upstream region. These observations have significant implications for management of patients with MSI-H tumours.