A novel breast cancer cell line (RAO‐3) was established by transduction of the Q61L mutant RAS into human mammary epithelial cells that were immortalized with catalytic subunit of telomerase (hTERT). The cells displayed anchorage‐independent growth and proliferation, and formed human mammary spindle cell carcinoma when injected into nude mice. Chromosome locus 1q22‐23 was partially duplicated and inverted on one of the 3 chromosomes present in the cell line. We report here that mutations of chromosome 1q22‐23 locus have resulted in the loss of RAB25 expression in the breast cancer cell line. Transduction of RAB25 into the breast cancer cell line arrests anchorage‐independent growth. We have also demonstrated loss of RAB25 in human breast tumor tissue. These data suggest that loss of RAB25 might contribute to tumorigenesis of breast cancer, and RAB25 is likely to be an important factor in the development of breast cancer. RAB25 could be used as biological marker of breast cancer and provides a target for gene replacement therapy. © 2006 Wiley‐Liss, Inc.