Exonucleolytic proofreading and DNA mismatch repair (MMR) act in series to maintain high-fidelity DNA replication and to avoid mutagenesis. MMR defects elevate the overall mutation rate and are associated with increased cancer incidence. Hypermutable colorectal and endometrial tumors with functional MMR were recently reported to carry amino acid substitutions in the exonuclease domain of DNA polymerase ϵ (Polϵ). This created a notion that loss of the proofreading activity of Polϵ is an initiating cause of some sporadic human cancers. In this study, we identified a somatic P286R substitution in the conserved ExoI motif of Polϵ in a collection of 52 sporadic colorectal tumor specimens. This change has been repeatedly observed in colorectal and endometrial tumors in previous studies despite many possible ways to inactivate Polϵ proofreading. To understand the reasons for the recurrent appearance of the P286R variant, we characterized its functional consequences using the yeast model system. An analogous substitution in the yeast Polϵ produced an unusually strong mutator phenotype exceeding that of proofreading-deficient mutants by two orders of magnitude. This argues that the P286R mutation acts at some level other than loss of exonuclease to elevate cancer risk. Heterozygosity for the variant allele caused a strong mutator effect comparable with that of complete MMR deficiency, providing an explanation for why loss of heterozygosity is not required for the development of Polϵ-mutant human tumors. Cancer Res; 74(7); 1895–901. ©2014 AACR.