Diffuse optical imaging (DOI) may be a beneficial diagnostic method for women with mammographically dense breast tissue. In order to evaluate the utility of DOI, we are developing broadband diffuse optical spectroscopy (DOS) to characterize the functional origins of optical signals in breast cancer patients. Broadband DOS combines multifrequency intensity-modulated and continuous-wave near-infrared light to quantify tissue absorption and scattering spectra from 650 to 1000 nm. Values of intrinsic physiological properties (oxy- and deoxy-hemoglobin, water, lipid, and scatter power) derived from absorption and scattering spectra provide detailed information on breast physiology. We present the results of clinical studies of 58 stage II/III malignant breast tumors using a noninvasive, handheld, broadband DOS probe. On average, eight positions were scanned over tumor and contralateral normal breast for each subject. Intrinsic physiological properties were statistically significantly different for malignant vs. normal tissues for all subjects, without patient age or tumor size/type stratification. Breast tissues containing malignant tumors displayed reduced lipid content (~20%) and increased water, deoxy-, and oxy-hemoglobin (<50% each) compared to normal breast tissues. Functional perturbations by the tumor were significantly larger than functional variations in normal tissues. A tissue optical index (TOI) derived from intrinsic physiological properties yielded an average two-fold contrast difference between malignant tumors and intrinsic tissue properties. Our results demonstrate that intrinsic optical signals can be influenced by functional perturbations characteristic of malignant transformation; cellular metabolism, extracellular matrix composition, and angiogenesis. Our findings further underscore the importance of broadband measurements and patient age stratification in breast cancer DOI.