Mbd4 (methyl-CpG binding domain 4) is a novel mammalian repair enzyme that has been implicated biochemically in the repair of mismatched G-T residues at methylated CpG sites. In addition, the human protein has been shown to interact with the DNA mismatch repair protein MLH1. To clarify the role of Mbd4 in DNA repair in vivo and to examine the impact of Mbd4 inactivation on gastrointestinal (GI) tumorigenesis, we introduced a null mutation into the murine Mbd4 gene by gene targeting. Heterozygous and homozygous Mbd4 mutant mice develop normally and do not show increased cancer susceptibility or reduced survival. Although Mbd4 inactivation did not increase microsatellite instability (MSI) in the mouse genome, it did result in a 2- to 3-fold increase in C-->T transition mutations at CpG sequences in splenocytes and epithelial cells of the small intestinal mucosa. The combination of Mbd4 deficiency with a germ line mutation in the adenomatous polyposis coli (Apc) gene increased the tumor number in the GI tract and accelerated tumor progression. The change in the GI cancer phenotype was associated with an increase in somatic C-->T mutations at CpG sites within the coding region of the wild-type Apc allele. These studies indicate that, although inactivation of Mbd4 does not by itself cause cancer predisposition in mice, it can alter the mutation spectrum in cancer cells and modify the cancer predisposition phenotype.