DNA mismatch repair enzymes (for example, MSH2) maintain genomic integrity, and their deficiency predisposes to several human cancers and to drug resistance. We found that leukemia cells from a substantial proportion of children (∼11%) with newly diagnosed acute lymphoblastic leukemia have low or undetectable MSH2 protein levels, despite abundant wild-type MSH2 mRNA. Leukemia cells with low levels of MSH2 contained partial or complete somatic deletions of one to four genes that regulate MSH2 degradation (FRAP1 (also known as MTOR), HERC1, PRKCZ and PIK3C2B); we also found these deletions in individuals with adult acute lymphoblastic leukemia (16%) and sporadic colorectal cancer (13.5%). Knockdown of these genes in human leukemia cells recapitulated the MSH2 protein deficiency by enhancing MSH2 degradation, leading to substantial reduction in DNA mismatch repair and increased resistance to thiopurines. These findings reveal a previously unrecognized mechanism whereby somatic deletions of genes regulating MSH2 degradation result in undetectable levels of MSH2 protein in leukemia cells, DNA mismatch repair deficiency and drug resistance.