Silver nanoparticles (AgNPs) are widely used in consumer and medical products. However, most AgNP toxicity data are based on in vitro studies. Only a few studies were performed in mammals and no studies systematically assessed cancer risk of AgNPs. In this study, we examined whether oral exposure to polyvinylpyrrolidone (PVP)-coated AgNPs induces DNA damage and permanent genome alterations, and modulates DNA repair gene expression in vivo in mice. We found that AgNPs induced large DNA deletions in developing embryos, irreversible chromosomal damage in bone marrow, and double strand breaks and oxidative DNA damage in peripheral blood and/or bone marrow. DNA Repair RT Profiler PCR Array showed that AgNPs altered expression of 36 of the 84 genes from which 24 genes were downregulated and 12 genes were upregulated. In particular, AgNPs downregulated a significant proportion of base excision repair (BER) genes. We hypothesized that downregulation of BER by AgNPs contributes to oxidative DNA damage and subsequent genomic instability, which predicts that BER defects enhance sensitivity to AgNPs. We tested this hypothesis in mice deficient in MutY homologue (Myh). Myh excises adenine mispaired with 8-oxoguanine to counteract its promutagenic activity and also has a role in cell cycle check points and apoptosis. MYH mutations are common in humans and predispose to colorectal and other types of cancer. Myh deficient mice were hypersensitive to AgNP-induced chromosomal damage. In summary, oral ingestion of AgNPs induces permanent genome alterations and may therefore cause cancer. In addition, BER defects, especially, Myh mutations, enhance sensitivity to AgNPs.