Lynch syndrome patients are susceptible to colorectal and endometrial cancers owing to inactivating germline mutations in mismatch repair genes, including MSH2 (ref. 1). Here we describe patients from Dutch and Chinese families with MSH2-deficient tumors carrying heterozygous germline deletions of the last exons of TACSTD1, a gene directly upstream of MSH2 encoding Ep-CAM. Due to these deletions, transcription of TACSTD1 extends into MSH2. The MSH2 promoter in cis with the deletion is methylated in Ep-CAM positive but not in Ep-CAM negative normal tissues, thus revealing a correlation between activity of the mutated TACSTD1 allele and epigenetic inactivation of the corresponding MSH2 allele. Gene silencing by transcriptional read-through of a neighboring gene in either sense, as demonstrated here, or antisense direction, could represent a general mutational mechanism. Depending on the expression pattern of the neighboring gene that lacks its normal polyadenylation signal, this may cause either generalized or mosaic patterns of epigenetic inactivation.