Literature reveals that many family businesses are not able to manage successful succession to the next generation due to poor successor nurturing. Therefore, it seems essential to apply effective methods of successor nurturing to prepare a competent successor. Mentoring, as one of the main methods of nurturing, helps the successor nurturing process through a range of functions. However, the effect of different functions of mentoring on preparing the successor has not been well explained in literature. In this research, we have addressed this issue by identifying the competencies which are developed by applying mentoring functions. To this end, the paper has studied five successful Iranian family businesses. The results suggest that these family businesses have applied all mentoring functions and each function has helped to develop specific competencies in the successor. This article discusses each of the functions and explains the way they affect successor nurturing.