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Twelve to 15% of sporadic colorectal cancers display defective DNA mismatch repair (MMR), manifested as microsatellite instability (MSI). In this group of cancers, promoter hypermethylation of the MMR gene hMLH1 is strongly associated with, and believed to be the cause of, MSI. A subset of colorectal neoplastic lesions arising in inflammatory bowel disease (IBD) is also characterized by MSI. We wished to determine whether hMLH1 hypermethylation was associated with diminished hMLH1 protein expression and MSI in IBD neoplasms. We studied 148 patients with IBD neoplasms, defined as carcinoma or dysplasia occurring in patients with ulcerative colitis or Crohn's disease. MSI was evaluated using multiplex fluorescent PCR to amplify loci D2S123, BAT-25, BAT-26, D5S346, and D17S250 in all cases. Lesions were characterized as high-frequency MSI (MSI-H) if they manifested instability at two or more loci, low-frequency MSI (MSI-L) if unstable at only one locus, or MS-stable (MSS) if showing no instability at any loci. Methylation-specific PCR was performed to determine the methylation status of the hMLH1 promoter region. hMLH1 protein expression was also evaluated by immunohistochemistry. Thirteen (9%) of 148 neoplasms arising in IBD were MSI-H, comprising 11 carcinomas and 2 dysplastic lesions. Sixteen additional lesions (11%) were MSI-L, comprising 11 carcinomas and 5 dysplastic lesions. The remaining 118 neoplasms (80%) were MSS. Six (46%) of 13 MSI-H, 1 (6%) of 16 MSI-L, and 4 (15%) of 27 MSS lesions showed hMLH1 hypermethylation (P = 0.013). Diminished hMLH1 protein expression in neoplastic cell nuclei relative to surrounding normal cell nuclei was demonstrated immunohistochemically in four of four (100%) hypermethylated lesions tested. In IBD neoplasia, hMLH1 promoter hypermethylation occurs frequently in the setting of MSI, particularly MSI-H. Furthermore, hMLH1 hypermethylation and MSI are strongly associated with diminished hMLH1 protein expression in IBD neoplasms. These findings suggest that hMLH1 hypermethylation causes defective DNA MMR in at least a subset of IBD neoplasms.