The utilization of next generation sequencing has been shown to accelerate gene discovery in human disease. However, our confidence in the correct disease-associations of rare variants continues to depend on functional analysis. Here, we employ a sensitive assay of human FGF8 variants in zebrafish to demonstrate that the spectrum of isoforms of FGF8 produced by alternative splicing can provide key insights into the genetic susceptibility to human malformations. In addition, we describe novel mutations in the FGF core structure that have both subtle and profound effects on ligand posttranslational processing and biological activity. Finally, we solve a case of apparent digenic inheritance of novel variants in SHH and FGF8, two genes known to functionally coregulate each other in the developing forebrain, as a simpler case of FGF8 diminished function.