For women with the mutant BRCA1 gene, removal of both breasts also lowered their risk of developing breast cancer.
But the same study found that undergoing a double mastectomy, or bilateral risk-reducing mastectomy (BRRM), made no difference to the life expectancy of women with another faulty gene, mutant BRCA2.
Both mutant versions of BRCA1 and BRCA2 greatly increase the chances of women developing breast cancer.
An estimated 72% of BRCA1 mutation carriers and 69% of women with BRCA2 mutations can expect to develop breast cancer by the age of 80, compared with 12% of the general population.
In May 2013, Hollywood star Angelina Jolie had both her breasts removed after discovering she carried a defective BRCA1 gene.
Two years later, she had her ovaries removed after a health scare. BRCA mutations also raise the risk of ovarian cancer.
The new study from the Netherlands tracked the progress of 1,696 BRCA1 mutation carriers and 1,139 BRCA1 mutation carriers who opted either for BRRM or watchful surveillance.
All the women were healthy with no previous history of cancer.
Over a period of nine to 11 years, seven of the BRCA1 carriers who had undergone double mastectomies and 269 of those who chose not to have the procedure were diagnosed with breast cancer.
Just one of the BRRM group died from breast cancer during the follow-up period, compared with 19 from the surveillance group.
For BRCA2 mutation carriers, the risk of dying was low, whether or not their breasts had been surgically removed.
Lead researcher Dr Annetee Heemskerk-Gerritsen, from Erasmus University Medical Centre in Rotterdam, said: "For BRCA1 mutation carriers, bilateral risk-reducing mastectomy not only drastically reduces the risk of developing breast cancer, but, as a consequence, also improves breast cancer-specific survival when compared to surveillance.
"For BRCA2 mutation carriers, however, BRRM seems to lad to similar breast cancer-specific survival, despite the reduced breast cancer risk."
Dr Heemskerk-Gerritsen presented the findings at the 11th European Breast Cancer Conference taking place in Barcelona, Spain.
She said the difference in survival supported the idea that the two mutations arose in different types of tumour.
"We observed that BRCA2-associated breast cancers were diagnosed with more favourable characteristics than BRCA1-associated cancers," she added.
BRCA2 cancers tended to be diagnosed at an older age, had more in common with normal cells, and were more likely to be hormone-sensitive.
Professor Isabel Rubio, from the Clinical University of Navarra in Spain - who co-chaired the conference but was not involved in the research, said: "Women who carry the BRCA1 or BRCA2 gene mutations face real uncertainty about how to reduce their risk of developing breast cancer and the risk of dying from the disease.
"A double mastectomy is invasive and can have uncomfortable, sometimes serious, adverse effects afterwards, such as losing sensitivity in the breast and nipple, but would seem to reduce the risk of developing the disease. However, women who opt for surveillance live with the knowledge that the disease could develop and then they will have to go through treatment.
"These are hard choices and every woman is different."