We investigated a family with an autosomal recessive syndrome of cafe-au-lait patches and childhood malignancy, notably supratentorial primitive neuroectodermal tumor. There was no cancer predisposition in heterozygotes; nor was there bowel cancer in any individual. However, autozygosity mapping indicated linkage to a region of 7p22 surrounding the PMS2 mismatch-repair gene. Sequencing of genomic PCR products initially failed to identify a PMS2 mutation. Genome searches then revealed a previously unrecognized PMS2 pseudogene, corresponding to exons 9-15, within a 100-kb inverted duplication situated 600 kb centromeric from PMS2 itself. This information allowed a redesigned sequence analysis, identifying a homozygous mutation (R802X) in PMS2 exon 14. Furthermore, in the family with Turcot syndrome, in which the first inherited PMS2 mutation (R134X) was described, a further truncating mutation was identified on the other allele, in exon 13. Further whole-genome analysis shows that the complexity of PMS2 pseudogenes is greater than appreciated and may have hindered previous mutation studies. Several previously reported PMS2 polymorphisms are, in fact, pseudogene sequence variants. Although PMS2 mutations may be rare in colorectal cancer, they appear, for the most part, to behave as recessive traits. For technical reasons, their involvement in childhood cancer, particularly in primitive neuroectodermal tumor, may have been underestimated.