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With recent breakthroughs in high-throughput sequencing, identifying deleterious mutations is one of the key challenges for personalized medicine. At the gene and protein level, it has proven difficult to determine the impact of previously unknown variants. A statistical method has been developed to assess the significance of disease mutation clusters on protein domains by incorporating domain functional annotations to assist in the functional characterization of novel variants.Disease mutations aggregated from multiple databases were mapped to domains, and were classified as either cancer- or non-cancer-related. The statistical method for identifying significantly disease-associated domain positions was applied to both sets of mutations and to randomly generated mutation sets for comparison. To leverage the known function of protein domain regions, the method optionally distributes significant scores to associated functional feature positions.Most disease mutations are localized within protein domains and display a tendency to cluster at individual domain positions. The method identified significant disease mutation hotspots in both the cancer and non-cancer datasets. The domain significance scores (DS-scores) for cancer form a bimodal distribution with hotspots in oncogenes forming a second peak at higher DS-scores than non-cancer, and hotspots in tumor suppressors have scores more similar to non-cancers. In addition, on an independent mutation benchmarking set, the DS-score method identified mutations known to alter protein function with very high precision.By aggregating mutations with known disease association at the domain level, the method was able to discover domain positions enriched with multiple occurrences of deleterious mutations while incorporating relevant functional annotations. The method can be incorporated into translational bioinformatics tools to characterize rare and novel variants within large-scale sequencing studies.