Mutation hotspots are commonly observed in genomic sequences and certain human disease loci, but general mechanisms for their formation remain elusive. Here we investigate the distribution of single-nucleotide changes around insertions/deletions (indels) in six independent genome comparisons, including primates, rodents, fruitfly, rice and yeast. In each of these genomic comparisons, nucleotide divergence (D) is substantially elevated surrounding indels and decreases monotonically to near-background levels over several hundred bases. D is significantly correlated with both size and abundance of nearby indels. In comparisons of closely related species, derived nucleotide substitutions surrounding indels occur in significantly greater numbers in the lineage containing the indel than in the one containing the ancestral (non-indel) allele; the same holds within species for single-nucleotide mutations surrounding polymorphic indels. We propose that heterozygosity for an indel is mutagenic to surrounding sequences, and use yeast genome-wide polymorphism data to estimate the increase in mutation rate. The consistency of these patterns within and between species suggests that indel-associated substitution is a general mutational mechanism.