The PALB2 protein is essential to RAD51-mediated homologous recombination (HR) repair. Germline monoallelic PALB2 pathogenic variants confer significant risks for breast cancer. However, the majority of PALB2 variants remain classified as variants of unknown significance (VUS). We aim to functionally and mechanistically evaluate three novel PALB2 VUS. Patient-derived lymphoblastoid cell lines containing the VUS were analyzed for nuclear localization and foci formation of RAD51 as a measure of HR efficiency. To understand the mechanism underlying the HR deficiency, PALB2 nuclear localization was assessed using immunofluorescence studies. Among these VUS, c.3251C>T (p.Ser1084Leu) occurred in a patient with metastatic breast cancer while c.1054G>C (p.Glu352Gln) and c.1057A>G (p.Lys353Glu) were seen in patients with squamous cell carcinoma of skin and renal cell carcinoma respectively. Variant c.3251C>T was located within the WD40 domain which normally masked the nuclear export signal sequence responsible for nuclear delocalization of PALB2. Correspondingly, c.3251C>T displayed aberrant cytoplasmic localization of PALB2 which led to an impaired RAD51 nuclear localization and foci formation. On the other hand, both c.1054G>C and c.1057A>G showed intact HR functions and nuclear localization of PALB2, consistent with their locations within domains of no known function. Additionally, the prevalence of c.1054G>C was similar among healthy controls and patients with breast cancer (as seen in other studies), suggestive of its non-pathogenicity. In conclusion, our studies provided the functional evidence showing the deleterious effect of c.3251C>T, and non-deleterious effects of c.1054G>C and c.1057A>G. Using the ClinGen Pathogenicity calculator, c.3251C>T remains a VUS while c.1054G>C and c.1057A>G may be classified as likely benign variants.