It has been well established that tumor progression is correlated with genetic instability. Growing evidence suggests that the tumor microenvironment itself constitutes a significant source of such genetic instability. The adverse conditions of this microenvironment are associated with the induction of mutagenesis and numerous types of DNA damage, including DNA strand breaks and oxidative base damage. While such DNA lesions pose a significant threat to genome integrity, recent studies now suggest that genetic instability in the tumor microenvironment also may arise from the dysregulation of DNA repair pathways. In this review, we will summarize the case for the tumor microenvironment as a key culprit in the induction of genetic instability and the potential mechanisms by which this phenomenon occurs.