To study the molecular basis for the clinical phenotype of incomplete penetrance of familial retinoblastoma, we have examined the functional properties of three RB mutations identified in the germ line of five different families with low penetrance. RB mutants isolated from common adult cancers and from classic familial retinoblastoma (designated as classic RB mutations) are unstable and generally do not localize to the nucleus, do not undergo cyclin-dependent kinase (cdk)-mediated hyperphosphorylation, show absent protein "pocket" binding activity, and do not suppress colony growth of RB(-) cells. In contrast, two low-penetrant alleles (661W and "deletion of codon 480") retained the ability to localize to the nucleus, showed normal cdk-mediated hyperphosphorylation in vivo, exhibited a binding pattern to simian virus 40 large T antigen using a quantitative yeast two-hybrid assay that was intermediate between classic mutants (null) and wild-type RB, and had absent E2F1 binding in vitro. A third, low-penetrant allele, "deletion of RB exon 4," showed minimal hyperphosphorylation in vivo but demonstrated detectable E2F1 binding in vitro. In addition, each low-penetrant RB mutant retained the ability to suppress colony growth of RB(-) tumor cells. These findings suggest two categories of mutant, low-penetrant RB alleles. Class 1 alleles correspond to promoter mutations, which are believed to result in reduced or deregulated levels of wild-type RB protein, whereas class 2 alleles result in mutant proteins that retain partial activity. Characterization of the different subtypes of class 2 low-penetrant genes may help to define more precisely functional domains within the RB product required for tumor suppression.