DNA mismatch repair (MMR) mechanism contributes to the maintenance of genomic stability. Loss of MMR function predisposes to a mutator cell phenotype, microsatellite instability (MSI) and cancer, especially hereditary non-polyposis colorectal cancer (HNPCC). To date, five MMR genes, hMSH2, hMSH6, hMLH1, hPMS2, and hMLH3 are associated with HNPCC. Although, hMLH3 is suggested to be causative in HNPCC, its relevance to MMR needs to be confirmed to reliably assess significance of the inherited sequence variations in it. Recently, a human heterodimer hMLH1/hMLH3 (hMutLgamma) was shown to be able to assist hMLH1/hPMS2 (hMutLalpha) in the repair of mismatches in vitro. To repair mismatches in vivo, hMLH3 ought to localize in the nucleus. Our immunofluorescence analyses indicated that when all the three MutL homologues are natively expressed in human cells, endogenous hMLH1 and hPMS2 localize in the nucleus, whereas hMLH3 stays in the cytoplasm. Absence of hPMS2 and co-expression of hMLH3 with hMLH1 results in its partial nuclear localization. Our results are clinically relevant since they show that in the nuclear localization hMLH3 is dependent on hMLH1 and competitive with hPMS2. The continuous nuclear localization of hMLH1 and hPMS2 suggests that in vivo, hPMS2 (hMutLalpha) has a major activity in MMR. In absence of hPMS2, hMLH3 (hMutLgamma) is located in the nucleus, suggesting a conditional activity in MMR and supporting its role as a low-risk gene in HNPCC.