Null mutations in DNA mismatch repair (MMR) genes elevate both base substitutions and insertions/deletions in simple sequence repeats. Data suggest that during replication of simple repeat sequences, polymerase slippage can generate single-strand loops on either the primer or template strand that are subsequently processed by the MMR machinery to prevent insertions and deletions, respectively. In the budding yeast Saccharomyces cerevisiae and mammalian cells, MMR appears to be more efficient at repairing mispairs comprised of loops on the template strand compared to loops on the primer strand. We identified two novel yeast pms1 alleles, pms1-G882E and pms1-H888R, which confer a strong defect in the repair of "primer strand" loops, while maintaining efficient repair of "template strand" loops. Furthermore, these alleles appear to affect equally the repair of 1-nucleotide primer strand loops during both leading- and lagging-strand replication. Interestingly, both pms1 mutants are proficient in the repair of 1-nucleotide loop mispairs in heteroduplex DNA generated during meiotic recombination. Our results suggest that the inherent inefficiency of primer strand loop repair is not simply a mismatch recognition problem but also involves Pms1 and other proteins that are presumed to function downstream of mismatch recognition, such as Mlh1. In addition, the findings reinforce the current view that during mutation avoidance, MMR is associated with the replication apparatus.