The human colorectal tumor cell line LoVo has a homozygous deletion in the hMSH2 gene from exon 3 to exon 8, is deficient in mismatch repair (MMR) activity, and exhibits microsatellite instability. To determine whether the introduction of a wild type hMSH2 into LoVo restores MMR activity and stabilizes microsatellite loci, we transferred a chromosome 2 fragment containing hMSH2 into a homologous recombination-proficient chicken DT40/human hybrid (DT40 2C) and a human chromosome 2 in a mouse A9 hybrid to LoVo. Transfers of these chromosomes into LoVo resulted in LoVo both with and without a wild-type hMSH2. Complete correlation was found between the presence of the wild-type hMSH2 and hMSH2 expression, an increased stability in microsatellite loci, and competency in MMR. The hMSH2-positive LoVo hybrids also showed an increased sensitivity to N-methyl-N'-nitro-N-nitrosoguanidine. This enhanced toxicity is associated with G(2) cell-cycle arrest followed by premature mitosis and cell death. These results suggest that hMSH2 may be responsible for complementing mutator and drug-resistant phenotypes in chromosome 2-transferred LoVo cells. To test whether the hMSH2 in DT40 2C cells can be modified by homologous recombination, we transfected DT40 2C with a targeting vector containing an hMSH2 exon 4 disrupted by the zeocin-resistant gene. The results showed that the hMSH2 locus in DT40 2C was efficiently targeted by an exogeneously transfected homologous sequence, suggesting that transfer of a modified hMSH2 from DT40 2C to LoVo via chromosome transfer could be used to determine the function of hMSH2.