Lynch syndrome, caused by germline mutations in the mismatch repair genes, is associated with increased cancer risk. Here using a large whole-genome sequencing data bank, cancer registry and colorectal tumour bank we determine the prevalence of Lynch syndrome, associated cancer risks and pathogenicity of several variants in the Icelandic population. We use colorectal cancer samples from 1,182 patients diagnosed between 2000–2009. One-hundred and thirty-two (11.2%) tumours are mismatch repair deficient per immunohistochemistry. Twenty-one (1.8%) have Lynch syndrome while 106 (9.0%) have somatic hypermethylation or mutations in the mismatch repair genes. The population prevalence of Lynch syndrome is 0.442%. We discover a translocation disrupting MLH1 and three mutations in MSH6 and PMS2 that increase endometrial, colorectal, brain and ovarian cancer risk. We find thirteen mismatch repair variants of uncertain significance that are not associated with cancer risk. We find that founder mutations in MSH6 and PMS2 prevail in Iceland unlike most other populations.