Somatic alterations of the lymphoid transcription factor gene PAX5 (also known as BSAP) are a hallmark of B cell precursor acute lymphoblastic leukemia (B-ALL), but inherited mutations of PAX5 have not previously been described. Here we report a new heterozygous germline variant, c.547G>A (p.Gly183Ser), affecting the octapeptide domain of PAX5 that was found to segregate with disease in two unrelated kindreds with autosomal dominant B-ALL. Leukemic cells from all affected individuals in both families exhibited 9p deletion, with loss of heterozygosity and retention of the mutant PAX5 allele at 9p13. Two additional sporadic ALL cases with 9p loss harbored somatic PAX5 substitutions affecting Gly183. Functional and gene expression analysis of the PAX5 mutation demonstrated that it had significantly reduced transcriptional activity. These data extend the role of PAX5 alterations in the pathogenesis of pre-B cell ALL and implicate PAX5 in a new syndrome of susceptibility to pre-B cell neoplasia.