Microsatellite instability (MSI) is a genetic feature of colorectal cancer (CRC) associated with peculiar clinicopathological features and improved prognosis. It is demonstrated in >90% of patients with hereditary non-polyposis colorectal cancer (HNPCC) in which DNA mismatch repair (MMR) defects are the cause of MSI. HNPCC develop at a young age, and patients are at increased risk for additional cancers (e.g. endometrial, stomach, or biliary tract cancer). MSI is found in 15–20% of sporadic CRC, often based on epigenetic silencing (i.e. MLH1). The prognostic and predictive value of MSI is not yet fully elucidated, although improved survival in MSI is suggested. Distinguishing sporadic MSI from HNPCC is at present guided by the combination of familial history, immunohistochemistry, and genotyping of MMR genes (MLH1, MSH2, MSH6, and PMS2). The efficiency and accuracy of MSI testing is evolving, with more knowledge achieved concerning multipopulation polymorphisms, selection of markers (e.g. quasimonomorphic vs. dinucleotides), and more time-efficient panels (e.g. not requiring normal/germline DNA match). The role of distinct genetic features, such as BRAF V600E mutations often found in sporadic MSI but not in HNPCC, may further improve future test algorithms. The present knowledge and controversies pertaining to molecular testing of MSI and MMR defects in CRC are presented.