Mutations of the ATM and NBS1 genes are responsible for the inherited Ataxia‐Telangiectasia and Nijmegen Breakage Syndrome, both of which are associated with a predisposition to cancer. A related syndrome, the Ataxia‐Telangiectasia‐like disorder, is due to mutations of the MRE11 gene. However, the role of this gene in cancer development has not been established. Here we describe an often homozygous mutation of the poly (T) 11 repeat within human MRE11 intron 4 that leads to aberrant splicing, impairment of wild‐type MRE11 expression and generation of a truncated protein. This mutation is present in mismatch repair‐deficient, but not proficient, colorectal cancer cell lines and primary tumours and is associated with reduced expression of the MRE11–NBS1–RAD50 complex, an impaired S‐phase checkpoint and abrogation of MRE11 and NBS1 ionizing radiation‐induced nuclear foci. Our findings identify MRE11 as a novel and major target for inactivation in mismatch repair‐defective cells and suggest its impairment may contribute to the development of colorectal cancer.