Introduction: The ataxia-telangiectasia mutated (ATM) gene (MIM ID 208900) encodes a protein kinase that plays a significant role in the activation of cellular responses to DNA double-strand breaks through subsequent phosphorylation of central players in the DNA damage-response pathway. Recent studies have confirmed that some specific variants in the ATM gene are associated with increased breast cancer (BC) risk. However, the magnitude of risk and the subset of variants that are pathogenic for breast cancer remain unresolved. Methods: To investigate the role of ATM in BC susceptibility, we studied 76 rare sequence variants in the ATM gene in a case-control family study of 2,570 cases of breast cancer and 1,448 controls. The variants were grouped into three categories based on their likely pathogenicity, as determined by in silico analysis and analyzed by conditional logistic regression. Likely pathogenic sequence variants were genotyped in 129 family members of 27 carrier probands (15 of which carried c.7271T > G), and modified segregation analysis was used to estimate the BC penetrance associated with these rare ATM variants. Results: In the case-control analysis, we observed an odds ratio of 2.55 and 95% confidence interval (CI, 0.54 to 12.0) for the most likely deleterious variants. In the family-based analyses, the maximum-likelihood estimate of the increased risk associated with these variants was hazard ratio (HR) = 6.88 (95% CI, 2.33 to 20.3; P = 0.00008), corresponding to a 60% cumulative risk of BC by age 80 years. Analysis of loss of heterozygosity (LOH) in 18 breast tumors from women carrying likely pathogenic rare sequence variants revealed no consistent pattern of loss of the ATM variant. Conclusions: The risk estimates from this study suggest that women carrying the pathogenic variant, ATM c.7271T > G, or truncating mutations demonstrate a significantly increased risk of breast cancer with a penetrance that appears similar to that conferred by germline mutations in BRCA2.