DNA mismatch repair is important because of its role in maintaining genomic integrity and its association with hereditary non-polyposis colon cancer (HNPCC). To identify new human mismatch repair proteins, we probed nuclear extracts with the conserved carboxy-terminal MLH1 interaction domain. Here we describe the cloning and complete genomic sequence of MLH3, which encodes a new DNA mismatch repair protein that interacts with MLH1. MLH3 is more similar to mismatch repair proteins from yeast, plants, worms and bacteria than to any known mammalian protein, suggesting that its conserved sequence may confer unique functions in mice and humans. Cells in culture stably expressing a dominant-negative MLH3 protein exhibit microsatellite instability. Mlh3 is highly expressed in gastrointestinal epithelium and physically maps to the mouse complex trait locus colon cancer susceptibility I (Ccs1). Although we were unable to identify a mutation in the protein-coding region of Mlh3 in the susceptible mouse strain, colon tumours from congenic Ccs1 mice exhibit microsatellite instability. Functional redundancy among Mlh3, Pms1 and Pms2 may explain why neither Pms1 nor Pms2 mutant mice develop colon cancer, and why PMS1 and PMS2 mutations are only rarely found in HNPCC families.