TBX5 is a T-box transcription factor that plays a critical role in organogenesis. Seven missense mutations in TBX5 have been identified in patients with Holt-Oram syndrome characterized by congenital heart defects and upper limb abnormalities. However, the functional significance and molecular pathogenic mechanisms of these mutations are not clear. In this study we describe functional defects in DNA binding, transcriptional activity, protein-protein interaction, and cellular localization of mutant TBX5 with these missense mutations (Q49K, I54T, G80R, G169R, R237Q, R237W, and S252I). Mutations G80R, R237Q, and R237W represent a group of mutations that dramatically reduce DNA-binding activity of TBX5, leading to reduced transcription activation by TBX5 and the loss of synergy in transcriptional activation between TBX5 and NKX2.5. The second group of mutations includes Q49K, I54T, G169R, and S252I, which have no or moderate effect on DNA-binding activity and the function of transcription activation of TBX5 but cause the complete loss of synergistic transcription activity between TBX5 and NKX2.5. All seven missense mutations greatly reduced the interaction of TBX5 with NKX2.5 in vivo and in vitro. Immunofluorescent staining showed that wild type TBX5 was localized completely into the nucleus, but mutants were localized in both nucleus and cytoplasm. These results demonstrate that all seven missense mutations studied here are functional mutations with a spectrum of defects ranging from decreases in DNA-binding activity and transcriptional activation to the dramatic reduction of interaction between TBX5 and NKX2.5, and loss of synergy in transcriptional activation between these two proteins, as well as impairment in the nuclear localization of TBX5. These defects are likely central to the pathogenesis of Holt-Oram syndrome.