We describe here a comprehensive and reliable assay to test the functional significance of variants of unknown clinical significance (VUS) identified in the human breast cancer susceptibility gene, BRCA2. The assay is based on the ability of human BRCA2 to complement the loss of endogenous Brca2 in mouse embryonic stem cells. The procedure involves generation of a desired mutation in BRCA2 present in a bacterial artificial chromosome (BAC) and the introduction of the BAC into ES cells engineered for the assay. These ES cells have one null and one conditional allele of Brca2. First, the effect of the BRCA2 variants on the viability of ES cells is tested by Cre-mediated deletion of the conditional allele. Subsequently, variants that result in viable ES cells are examined for their effect on known functions of BRCA2 using a variety of functional assays such as sensitivity to genotoxic agents, in vivo and in vitro proliferation, effect on homologous recombination and genomic stability. The method described herein allows for the analysis of three to five sequence variants within 2-3 months. This approach can also be used for functional analysis of variants identified in other human disease genes that result in a phenotype detectable in ES cells.