The MUTYH base excision repair protein corrects oxidative DNA damage. Bi-allelic germline MUTYH mutations cause a rare, Mendelian recessive syndrome of colorectal adenomas, duodenal polyps and colorectal cancer (CRC), in which tumours have excess somatic C:G > A:T mutations and the mutational signature SBS36. Signature SBS18, which resembles SBS36, is common in sporadic CRCs and other cancers. Increased risks of CRC and other cancers have been reported in germline MUTYH heterozygotes (mono-allelic mutation carriers, frequency 2-3%), but the existence of these associations and underlying mechanism have remained controversial. Compared with MUTYH-wildtype individuals, CRCs from MUTYH heterozygotes had ~2.5-fold excess of signature SBS18, increased C:G > A:T transversions (including in driver genes) and raised mutation burden. These observations resulted from MUTYH haploinsufficiency, rather than somatic loss of the wildtype allele, contrary to previous suggestions. Hypermutation probably begins before cancer initiation. In a case-control analysis, we found approximately 1.4-fold elevated risk of CRC in MUTYH heterozygotes, causally mediated through increased SBS18. The association between MUTYH heterozygosity and SBS18 was also present in many extra-colonic cancers, including other gastrointestinal tumours, but the raised SBS18 did not detectably increase the risk of these cancers. Germline heterozygotes for another base excision repair gene, MBD4, showed equivalent associations for SBS1, C:G > T:A mutations and CRC risk. Mutational signatures in cancers can result in part from non-rare germline variation in DNA repair. The specific effect of MUTYH heterozygosity on CRC risk plausibly reflects the high baseline levels of oxidative damage and SBS18 activity in the colorectum.