Loss of the DNA mismatch repair (MMR) protein MSH3 leads to the development of a variety of tumors in mice without significantly affecting survival rates, suggesting a modulating role for the MutSβ (MSH2-MSH3) complex in late-onset tumorigenesis. To better study the role of MSH3 in tumor progression, we crossed Msh3(-/-) mice onto a tumor predisposing p53-deficient background. Survival of Msh3/p53 mice was not reduced compared with p53 single mutant mice; however, the tumor spectrum changed significantly from lymphoma to sarcoma, indicating MSH3 as a potent modulator of p53-driven tumorigenesis. Interestingly, Msh3(-/-) mouse embryonic fibroblasts displayed increased chromatid breaks and persistence of γH2AX foci following ionizing radiation, indicating a defect in DNA double-strand break repair (DSBR). Msh3/p53 tumors showed increased loss of heterozygosity, elevated genome-wide copy-number variation and a moderate microsatellite instability phenotype compared with Msh2/p53 tumors, revealing that MSH2-MSH3 suppresses tumorigenesis by maintaining chromosomal stability. Our results show that the MSH2-MSH3 complex is important for the suppression of late-onset tumors due to its roles in DNA DSBR as well as in DNA MMR. Further, they demonstrate that MSH2-MSH3 suppresses chromosomal instability and modulates the tumor spectrum in p53-deficient tumorigenesis and possibly has a role in other chromosomally unstable tumors as well.