MBD4 binds to methylated DNA and acts as a thymine DNA glycosylase in base excision repair. Deficiency of MBD4 in mice enhances mutation at CpG sites and alters apoptosis in response to DNA damage, but does not increase tumorigenesis in mismatch repair-deficient mice. However, in humans, frameshift mutation of MBD4, rather than deletion, is what occurs in up to 43% of microsatellite unstable colon cancers. There is no murine equivalent of this mutation. We now show that recombinant truncated MBD4 (MBD4(tru)) inhibits glycosylase activities of normal MBD4 or Uracil DNA glycosylase in cell-free assays as a dominant negative effect. Furthermore, overexpression of MBD4(tru) in Big Blue (lacI)-transfected, MSI human colorectal carcinoma cells doubled mutation frequency, indicating that the modest dominant negative effect on DNA repair can occur in living cells in short-term experiments. Intriguingly, the whole mutation spectrum was increased, not only at CpG sites, suggesting that truncated MBD4 has a more widespread effect on genomic stability. This demonstration of a dominant negative effect may be of significance in tumour progression and acquisition of drug resistance.