The mutation appears only in a small subset of prostate cancer patients, but those who inherited it showed 10 to 20 times higher risk of developing prostate cancer, particularly before age 55, the researchers said.
The advance, described in the New England Journal of Medicine, comes amid a two-decade search for clues about the genetic origins of prostate cancer, the most commonly diagnosed male cancer with 240,000 new US cases each year.
Other attempts to isolate particular gene links to prostate cancer have shown mixed results.
"This is the first major genetic variant associated with inherited prostate cancer," said co-author Kathleen Cooney, professor of internal medicine and urology at the University of Michigan Medical School.
The mutation of the HOXB13 gene is believed rare in the general population -- only one percent of men are thought to carry it -- but among those who do the risks of developing prostate cancer while young may skyrocket.
"The mutation is significantly more common in men with a family history of prostate cancer that strikes at an earlier age, compared to older patients with no family history," said University of North Carolina scientist Ethan Lange, who was part of the research team.
While more study is needed, scientists hope the finding could lead to genetic tests for men at high risk for prostate cancer, much the same way as women with family history of breast cancer may get tested for the BRCA1 and BRCA2 genes.
"Still, our results strongly suggest this is the most clinically important mutation identified for prostate cancer to date," said Lange.
For this study, researchers honed in on a certain chromosome region, 17q21-22, using samples from young patients with prostate cancer from 94 families who had taken part in studies at the University of Michigan and Johns Hopkins University.
Using the latest technology, they sequenced the DNA of more than 200 genes in that chromosome region and found that four separate families had the same mutation in the HOXB13 gene.
The gene is crucial during fetal development of the prostate and the gland's function in later life.
Of the total 5,100 men scanned, 72 were found to have the mutation, or about 1.4 percent of subjects studied.
In a control group of 1,400 men without prostate cancer, researchers found only one who carried the mutation.
Two different mutations on the same gene were found in families of African descent, but since very few of the participants were black, more research is needed to determine the significance of those.
"It's what we've been looking for over the past 20 years," said co-author William Isaacs, professor of urology and oncology at the Johns Hopkins University School of Medicine.
"It's long been clear that prostate cancer can run in families, but pinpointing the underlying genetic basis has been challenging and previous studies have provided inconsistent results."
Prostate cancer kills about 32,000 men in the United States each year, according to the National Cancer Institute. Hereditary prostate cancer accounts for 10 to 15 percent of all cases.
African-Americans are twice as likely to die from prostate cancer as whites. The disease is common in North America and northwestern Europe, but less so in Asia and South America.
"Previous research has identified multiple genetic foci that appear to be associated with an increase risk of prostate cancer, but the identification of a specific prostate cancer gene has been challenging," said Manish Vira, a urologist at the North Shore-Long Island Jewish Health System, who was not part of the study.
"Just as in patients with breast cancer and the BRCA gene, one could envision a future in which a man with a family history of prostate cancer is screened for this particular mutation, and if positive, would begin early screening as he would be at risk for early onset prostate cancer."