Recent genome sequencing efforts have identified millions of somatic mutations in cancer. However, the functional impact of most variants is poorly understood. Here we characterize 194 somatic mutations identified in primary lung adenocarcinomas. We present an expression-based variant-impact phenotyping (eVIP) method that uses gene expression changes to distinguish impactful from neutral somatic mutations. eVIP identified 69% of mutations analyzed as impactful and 31% as functionally neutral. A subset of the impactful mutations induces xenograft tumor formation in mice and/or confers resistance to cellular EGFR inhibition. Among these impactful variants are rare somatic, clinically actionable variants including EGFR S645C, ARAF S214C and S214F, ERBB2 S418T, and multiple BRAF variants, demonstrating that rare mutations can be functionally important in cancer.