Microsatellite instability (MSI) is a hypermutable phenotype caused by the loss of DNA mismatch repair activity. MSI is detected in about 15% of all colorectal cancers; 3% are of these are associated with Lynch syndrome and the other 12% are caused by sporadic, acquired hypermethylation of the promoter of the MLH1 gene, which occurs in tumors with the CpG island methylator phenotype. Colorectal tumors with MSI have distinctive features, including a tendency to arise in the proximal colon, lymphocytic infiltrate, and a poorly differentiated, mucinous or signet ring appearance. They have a slightly better prognosis than colorectal tumors without MSI and do not have the same response to chemotherapeutics. Discovery of MSI in colorectal tumors has increased awareness of the diversity of colorectal cancers and implications for specialized management of patients.