An accurate algorithm is essential for effective molecular diagnosis of hereditary colorectal cancer (CRC). Here, we have extended the analysis of 71 CRC cases suspected to be Lynch syndrome cases for MSH2, MLH1, MSH6, and PMS2 gene defects. All cases were screened for mutations in MSH2, MLH1, and MSH6, and all cases where tumors were available were screened for microsatellite instability (MSI) and expression of MSH2 and MLH1. Subsequently, mutation-negative cases were screened for MLH1 methylation and mutations in PMS2. Of the MSI-high (MSI-H) cases, 96% had a mismatch repair (MMR) gene defect, mostly involving MSH2 or MLH1; one PMS2 mutation, one MLH1 epimutation, and no MSH6 mutations were found. Four of the 28 MSI-H cases, including one Amsterdam criteria case, had biallelic tumor MLH1 methylation, indicating that sporadic cases can be admixed in with Lynch syndrome cases, even those meeting the strongest criteria for Lynch syndrome. MMR gene defects were found in similar frequency in cases where tumors were and were not available. One MLH1 and one MSH2 deletion mutation were found in MSI-stable/low cases, indicating that MSI testing can exclude cases with pathogenic mutations. Our analysis supports a diagnostic algorithm where cases are selected for analysis based on clinical criteria or prediction models; isolated sporadic young-onset cases can be prescreened by tumor testing, whereas familial cases may be directly subjected to molecular analysis for mutations in MMR genes followed by MSI, protein expression, and DNA methylation analysis to aid in the resolution of mutation-negative cases.