The epigenetic modifier histone deacetylase-2 (HDAC2) is frequently dysregulated in colon cancer cells. Microsatellite instability (MSI), an unfaithful replication of DNA at nucleotide repeats, occurs in about 15% of human colon tumors. MSI promotes a genetic frameshift and consequently a loss of HDAC2 in up to 43% of these tumors. We show that long-term and short-term cultures of colorectal cancers with MSI contain subpopulations of cells lacking HDAC2. These can be isolated as single cell-derived, proliferating populations. Xenografted patient-derived colon cancer tissues with MSI also show variable patterns of HDAC2 expression in mice. HDAC2-positive and HDAC2-negative RKO cells respond similarly to pharmacological inhibitors of the class I HDACs HDAC1/HDAC2/HDAC3. In contrast to this similarity, HDAC2-negative and HDAC2-positive RKO cells undergo differential cell cycle arrest and apoptosis induction in response to the frequently used chemotherapeutic 5-fluorouracil, which becomes incorporated into and damages RNA and DNA. 5-fluorouracil causes an enrichment of HDAC2-negative RKO cells in vitro and in a subset of primary colorectal tumors in mice. 5-fluorouracil induces the phosphorylation of KAP1, a target of the checkpoint kinase ataxia-telangiectasia mutated (ATM), stronger in HDAC2-negative cells than in their HDAC2-positive counterparts. Pharmacological inhibition of ATM sensitizes RKO cells to cytotoxic effects of 5-fluorouracil. These findings demonstrate that HDAC2 and ATM modulate the responses of colorectal cancer cells towards 5-FU.