Acquired resistance to alkylating agents such as N-methyl-N-nitrosourea or N-methyl-N'-nitro-N-nitrosoguanidine results from the ability to tolerate the potentially cytotoxic methylated base O6-methylguanine (m6-G) in DNA. In the absence of repair by demethylation in situ, m6-G is probably lethal through its inappropriate processing by the cell. DNA mismatch correction is an attractive candidate for the processing function because although it is replicated, m6-G has no perfect complementary base. Thus, m6-G in DNA might provoke abortive mismatch repair and tolerance could subsequently arise through loss of a mismatch repair pathway. Mismatch correction helps maintain genomic fidelity by removing misincorporated bases and deaminated 5-methylcytosine from DNA, and its loss by mutation confers a mutator phenotype on Escherichia coli. Here we describe human and hamster cell lines that are tolerant to N-methyl-N-nitrosourea and are defective in a DNA mismatch binding activity. The loss of this activity, which acts on G.T mispairs, confers a mutator phenotype.