Hereditary heterozygous mutations in a variety of DNA double-strand break (DSB) repair genes have been associated with increased breast cancer risk. In the Finnish population, PALB2 (partner and localizer of BRCA2) represents a major susceptibility gene for female breast cancer, and so far, only one mutation has been described, c.1592delT, which leads to a sixfold increased disease risk. PALB2 is thought to participate in homologous recombination (HR). However, the effect of the Finnish founder mutation on DSB repair has not been investigated. In the current study, we used a panel of lymphoblastoid cell lines (LCLs) derived from seven heterozygous female PALB2 c.1592delT mutation carriers with variable health status and six wild-type matched controls. The results of our DSB repair analysis showed that the PALB2 mutation causes specific changes in pathway usage, namely increases in error-prone single-strand annealing (SSA) and microhomology-mediated end-joining (MMEJ) compared with wild-type LCLs. These data indicated haploinsufficiency regarding the suppression of error-prone DSB repair in PALB2 mutation carriers. To the contrary, neither reduced HR activities, nor impaired RAD51 filament assembly, nor sensitization to PARP inhibition were consistently observed. Expression of truncated mutant versus wild-type PALB2 verified a causal role of PALB2 c.1592delT in the shift to error-prone repair. Discrimination between healthy and malignancy-presenting PALB2 mutation carriers revealed a pathway shift particularly in the breast cancer patients, suggesting interaction of PALB2 c.1592delT with additional genomic lesions. Interestingly, the studied PALB2 mutation was associated with 53BP1 accumulation in the healthy mutation carriers but not the patients, and 53BP1 was limiting for error-prone MMEJ in patients but not in healthy carriers. Our study identified a rise in error-prone DSB repair as a potential threat to genomic integrity in heterozygous PALB2 mutation carriers. The used phenotypic marker system has the capacity to capture dysfunction caused by polygenic mechanisms and therefore offers new strategies of cancer risk prediction.