Inherited mutations in the BRCA2-interacting protein PALB2 are known to be associated with increased risks of developing breast cancer. To evaluate the contribution of PALB2 to familial breast cancer in the United States, we sequenced the coding sequences and flanking regulatory regions of the gene from constitutional genomic DNA of 1,144 familial breast cancer patients with wild-type sequences at BRCA1 and BRCA2. Overall, 3.4% (33/972) of patients not selected by ancestry and 0% (0/172) of patients specifically of Ashkenazi Jewish ancestry were heterozygous for a nonsense, frameshift, or frameshift-associated splice mutation in PALB2. Mutations were detected in both male and female breast cancer patients. All mutations were individually rare: the 33 heterozygotes harbored 13 different mutations, 5 previously reported and 8 novel mutations. PALB2 heterozygotes were 4-fold more likely to have a male relative with breast cancer (P = 0.0003), 6-fold more likely to have a relative with pancreatic cancer (P = 0.002), and 1.3-fold more likely to have a relative with ovarian cancer (P = 0.18). Compared with their female relatives without mutations, increased risk of developing breast cancer for female PALB2 heterozygotes was 2.3-fold (95% CI: 1.5–4.2) by age 55 and 3.4-fold (95% CI: 2.4–5.9) by age 85. Loss of the wild-type PALB2 allele was observed in laser-dissected tumor specimens from heterozygous patients. Given this mutation prevalence and risk, consideration might be given to clinical testing of PALB2 by complete genomic sequencing for familial breast cancer patients with wild-type sequences at BRCA1 and BRCA2. Cancer Res; 71(6); 2222–9. ©2011 AACR.