Papillary carcinoma of the breast is a variant of predominantly intraductal carcinoma characterized by a papillary growth pattern with fibrovascular support. Loss of heterozygosity (LOH) was evaluated at multiple chromosomal loci (including loci reported to show frequent genetic alterations in breast cancer) to determine the frequency of genetic mutations in these tumors and their precursors. Thirty-three papillary lesions of the breast (6 papillary carcinomas, 12 carcinomas arising in a papilloma, and 15 intraductal papillomas with florid epithelial hyperplasia) were retrieved from the files of the Armed Forces Institute of Pathology (AFIP). Tumor cells and normal tissue were microdissected in each case and screened for LOH at INT-2 and p53 as well as several loci on chromosome 16p13 in the TSC2/PKD1 gene region (D16S423, D16S663, D16S665). LOH on chromosome 16p13 was present in 10 of 16 (63%) informative cases of either papillary carcinoma or carcinoma arising in a papilloma as well as in 6 of 10 (60%) informative cases of intraductal papilloma with florid epithelial hyperplasia (IDH). One case showed simultaneous LOH in both the florid IDH and carcinoma components of a papilloma. LOH was not observed at either INT-2 or p53 in any of the papillary carcinomas or papillomas with florid IDH. In conclusion, a high frequency of LOH at chromosome 16p13 (the TSC2/PKD1 gene region) is in both papillary carcinomas of the breast as well as in papillomas with florid IDH, including a case with LOH present simultaneously in both components. These findings suggest that chromosome 16p contains a tumor suppressor gene that frequently is mutated early in papillary neoplasia.