The renal coloboma syndrome (OMIM 120330) is caused by mutations in the PAX2 gene. Typical findings in these patients include renal hypoplasia, renal insufficiency, vesicoureteric reflux, and optic disc coloboma. A family with a novel heterozygous 10-bp deletion in exon 2 of the PAX2 gene leading to a truncating mutation and variable phenotype across three generations is reported. The first presentation of multicystic dysplastic kidney in this syndrome is reported. The possibility that abnormal PAX2 protein in this case may cause a dominant negative effect also is discussed. The finding of multicystic dysplastic kidney in renal coloboma syndrome could suggest that PAX2 may play a role in early ureteric obstruction and subsequent renal maldevelopment.