A substantial fraction of sporadic and inherited colorectal and endometrial cancers in humans is deficient in DNA mismatch repair (MMR). These cancers are characterized by length alterations in ubiquitous simple sequence repeats, a phenotype called microsatellite instability. Here we have exploited this phenotype by developing a novel approach for the highly selective gene therapy of MMR-deficient tumors. To achieve this selectivity, we mutated the VP22FCU1 suicide gene by inserting an out-of-frame microsatellite within its coding region. We show that in a significant fraction of microsatellite-instable (MSI) cells carrying the mutated suicide gene, full-length protein becomes expressed within a few cell doublings, presumably resulting from a reverting frameshift within the inserted microsatellite. Treatment of these cells with the innocuous prodrug 5-fluorocytosine (5-FC) induces strong cytotoxicity and we demonstrate that this owes to multiple bystander effects conferred by the suicide gene/prodrug combination. In a mouse model, MMR-deficient tumors that contained the out-of-frame VP22FCU1 gene displayed strong remission after treatment with 5-FC, without any obvious adverse systemic effects to the mouse. By virtue of its high selectivity and potency, this conditional enzyme/prodrug combination may hold promise for the treatment or prevention of MMR-deficient cancer in humans.