The BRCA1 gene was cloned in 1994 as one of the genes that conferred genetic predisposition to early-onset breast and ovarian cancer. Since then, a genetic test for identification of high-risk individuals has been developed. Despite being implicated in many important cellular pathways, including DNA repair and regulation of transcription, the exact mechanism by which inactivation of BRCA1 might lead to malignant transformation of cells remains unknown. We examine the mechanisms that underlie inactivation of BRCA1 and assess how they affect management of patients, in terms of both primary and secondary cancer prevention strategies. Furthermore, we look at the potential usefulness of BRCA1 as a prognostic tool and as a predictive marker of response to different classes of drugs. Finally, throughout this review, we draw links between the functional consequences of BRCA1 inactivation, in terms of key cellular signalling pathways, and how they might explain specific clinical observations in individuals who carry mutations in the gene.