The healthy colorectal mucosa contains many resident intraepithelial lymphocytes (IELs) consisting of partially activated yet hyporesponsive CD8(+) T cells. A predominant feature of colorectal cancers (CRCs) characterized by high levels of microsatellite instability (MSI-H) is heavy infiltration by an intraepithelial population of tumor infiltrating lymphocytes (iTILs). While it has been assumed that these iTILs originate from tumor infiltration by peripheral CD8(+) effector T cells, their origin remains unknown. In light of the phenotypic and functional differences exhibited by IELs and peripheral T cells, elucidation of the precursor population of iTILs in MSI-H CRCs could clarify the role played by these lymphocytes in tumor progression. The aim of the present study was to investigate whether MSI-H CRCs interact differently with IEL- versus peripherally-derived CD8(+) T cells. Using a Transwell assay system to mimic basolateral infiltration of tumor cells by lymphocytes, T cell migration, retention, proliferation and phenotypic alterations were investigated. Results indicate that MSI-H CRCs preferentially retain and expand IEL-derived cells to a greater degree than their microsatellite stable (MSS) counterparts. While MSI-H CRCs also retained more peripherally derived T cells, this number was considerably less than that from the IEL population. While interaction of IELs with either CRC type led to baseline lymphocyte activation, MSS CRCs induced upregulation of additional activation markers on retained IELs compared to MSI-H CRCs. These results suggest that the abundant iTILs present in MSI-H CRCs result from expansion of the preexisting mucosal IEL population and imply a limited prognostic role for iTILs in MSI-H CRC.