The majority of colorectal cancer (CRC) exhibiting the micosatellite instability (MSI) phenotype is due to hypermethylation of the hMLH1 gene promoter. We aimed to test the hypothesis that polymorphisms in genes coding for enzymes involved in folate metabolism play a role in altered promoter-specific hypermethylation and thus predispose to MSI CRC. Analysis of MSI was performed in 1685 CRCs, and polymorphism genotypes were determined in germline DNA for all cases and 2692 cancer-free controls. MSI was observed in 171 cancers (10.1%). Compared to homozygous wild-type individuals, those with MTHFR 677TT genotype were more likely to have MSI than microsatellite stable (MSS) CRC [odds ratio (OR) 1.90; 95% confidence interval (CI): 1.09-3.31]. When MTHFR C677T genotype frequencies in MSS CRC cases were compared to controls, individuals with homozygous variant genotype were at 19% reduced risk of cancer compared to wild type (OR = 0.81; 95% CI: 0.65-1.02). Conversely, when MSI CRC cases were compared to controls, individuals with one or two MTHFR 677T alleles were at 42% increased cancer risk (OR = 1.42; 95% CI: 1.02-1.96). Our observations indicate that MTHFR 677TT homozygous individuals are more likely to develop MSI CRC than those with wild-type genotype, and this common polymorphism has differential influences on MSI and MSS CRC risk. Stratification by MSI status should aid future studies investigating the complex relationships between genotype, environmental factors and CRC risk.