To test the hypothesis that a mutator phenotype may be associated with carcinogenesis (L. A. Loeb, Cancer Res., 51: 3074-3079, 1991), we have compared the fidelity of double-stranded DNA replication and the efficiency of mismatch repair in extracts from normal diploid and malignantly transformed human cells. Included was a diploid fibroblast strain and its transformed derivative, as well as a second diploid fibroblast strain and HeLa cells. The fidelity of DNA replication by cytoplasmic extracts in the presence of simian virus 40 large tumor antigen (SV40 T-antigen) was measured using a forward mutagenesis assay. The replicated DNA consisted of double-stranded M13 mp2 DNA containing the SV40 origin of replication and the lacZ alpha complementation gene as a target sequence for scoring mutations. T-antigen-dependent replication was detected in all cell extracts, with those from transformed cells having the greatest activity. No differences in replication fidelity were detected between normal and transformed cell extracts. Using a heteroduplex containing a G.G mispair, we also detected mismatch repair activity in the cell extracts, including efficient repair in extracts from malignantly transformed cells. While these data do not eliminate the possibility that a mutator phenotype may be associated with carcinogenesis, they do suggest that genetic instability associated with transformation does not involve reduced fidelity of replication of undamaged DNA or reduced mismatch repair efficiency.