Costello syndrome is caused by HRAS germline mutations affecting Gly12 or Gly13 in >90% of cases and these are associated with a relatively homogeneous phenotype. Rarer mutations in other HRAS codons were reported in patients with an attenuated or mild phenotype. Disease-associated HRAS missense mutations result in constitutive HRAS activation and increased RAF-MEK-ERK and PI3K-AKT signal flow. Here we report on a novel heterozygous HRAS germline alteration, c.266C>G (p.S89C), in a girl presenting with severe fetal hydrops and pleural effusion, followed by a more benign postnatal course. A sibling with the same mutation and fetal polyhydramnios showed a Dandy–Walker malformation; his postnatal course was complicated by severe feeding difficulties. Their apparently asymptomatic father is heterozygous for the c.266C>G change. By functional analyses we identified reduced levels of active HRASS89C and diminished MEK, ERK and AKT phosphorylation in cells overexpressing HRASS89C, which represent novel consequences of disease-associated HRAS mutations. Given our patients' difficult neonatal course and presence of this change in their asymptomatic father, we hypothesize that its harmful consequences may be time limited, with the late fetal stage being most sensitive. Alternatively, the phenotype may develop only in the presence of an additional as-yet-unknown genetic modifier. While the pathogenicity of the HRAS c.266C>G change remains unproven, our data may illustrate wide functional and phenotypic variability of germline HRAS mutations. © 2012 Wiley Periodicals, Inc.