This study aimed to investigate the effect of dose reduction on diagnostic accuracy and radiation risk in digital mammography. Simulated masses and microcalcifications were positioned in an anthropomorphic breast phantom. Thirty digital images, 14 with lesions, 16 without, were acquired of the phantom using a Mammomat Novation (Siemens, Erlangen, Germany) at each of three dose levels. These corresponded to 100%, 50% and 30% of the normally used average glandular dose (AGD; 1.3 mGy for a standard breast). Eight observers interpreted the 90 unprocessed images in a free response study, and the data were analysed with the jackknife free response receiver operating characteristic (JAFROC) method. Observer performance was assessed using the JAFROC figure of merit (FOM). The benefit of radiation risk reduction was estimated based on several risk models. There was no statistically significant difference in performance, as described by the FOM, between the 100% and the 50% dose levels. However, the FOMs for both the 100% and the 50% dose were significantly different from the corresponding quantity for the 30% dose level (F-statistic = 4.95, p-value = 0.01). A dose reduction of 50% would result in three to nine fewer breast cancer fatalities per 100,000 women undergoing annual screening from the age of 40 to 49 years. The results of the study indicate a possibility of reducing the dose to the breast to half the dose level currently used. This has to be confirmed in clinical studies, and possible differences depending on lesion type should be examined further.