The retinoblastoma (Rb) gene is the prototype for a class of recessive human cancer genes in which loss of activity of both normal alleles is thought to be associated with tumorigenesis. Sixteen of 40 retinoblastomas examined with a complementary DNA probe shown to be the Rb gene had identifiable structural changes of the Rb gene including in some cases homozygous internal deletions with corresponding truncated transcripts. An osteosarcoma also had a homozygous internal deletion with a truncated transcript. In addition, possible hot spots for deletion were identified within the Rb genomic locus. Among those tumors with no identifiable structural changes there was either absence of an Rb transcript or abnormal expression of the Rb transcript. Comparison of the structural changes in the tumor cells and fibroblasts of certain patients provided support for Knudson's two-hit hypothesis for the development of retinoblastoma at the molecular level. The ability to detect germline structural deletions in fibroblasts from some patients with bilateral retinoblastoma also indicates that the isolated gene is useful for diagnostic purposes.