Familial clustering of colorectal cancer occurs in 15-20% of cases, however recognized cancer syndromes explain only a small fraction of this disease. Thus, the genetic basis for the majority of hereditary colorectal cancer remains unknown. EPHB2 has recently been implicated as a candidate tumor suppressor gene in colorectal cancer. The aim of this study was to evaluate the contribution of EPHB2 to hereditary colorectal cancer. We screened for germline EPHB2 sequence variants in 116 population-based familial colorectal cancer cases by DNA sequencing. We then estimated the population frequencies and characterized the biological activities of the EPHB2 variants identified. Three novel nonsynonymous missense alterations were detected. Two of these variants (A438T and G787R) result in significant residue changes, while the third leads to a conservative substitution in the carboxy-terminal SAM domain (V945I). The former two variants were found once in the 116 cases, while the V945I variant was present in 2 cases. Genotyping of additional patients with colorectal cancer and control subjects revealed that A438T and G787R represent rare EPHB2 alleles. In vitro functional studies show that the G787R substitution, located in the kinase domain, causes impaired receptor kinase activity and is therefore pathogenic, whereas the A438T variant retains its receptor function and likely represents a neutral polymorphism. Tumor tissue from the G787R variant case manifested loss of heterozygosity, with loss of the wild-type allele, supporting a tumor suppressor role for EPHB2 in rare colorectal cancer cases. Rare germline EPHB2 variants may contribute to a small fraction of hereditary colorectal cancer.