One of the causes of breast cancer is overexpression of the human epidermal growth factor receptor 2 (HER2). Enhanced receptor autophosphorylation and resistance to activation-induced down regulation have been suggested as mechanisms for HER2-induced sustained signaling and cell transformation. However, the molecular mechanisms underlying these possibilities remain incompletely understood. In the current report, we present evidence that show that HER2 overexpression does not lead to receptor hyper-autophosphorylation, but alters patterns in a manner that favors receptor stability and sustained signaling. Specifically, HER2 overexpression blocks EGFR tyrosine phosphorylation on Y1045 and Y1068, the known docking sites of c-Cbl and Grb2, respectively, while promoting phosphorylation on Y1173, the known docking site of the Gab adaptor proteins and phospholipase C gamma (PLCγ). Under these conditions, HER2 itself is phosphorylated on Y1221/1222, with no known role, and on Y1248 that corresponds to Y1173 of EGFR. Interestingly, suppressed EGFR autophosphorylation on the Grb2 and c-Cbl binding sites correlated with receptor stability and sustained signaling, suggesting that HER2 accomplishes these tasks by altering autophosphorylation patterns. In conformity with these findings, mutation of the Grb2 binding site on EGFR (Y1068F-EGFR) conferred resistance to ligand-induced degradation which in turn induced sustained signaling, and increased cell proliferation and transformation. These findings suggest that the Grb2 binding site on EGFR is redundant for signaling, but critical for receptor regulation. On the other hand, mutation of the putative Grb2 binding site in HER2 (Y1139) did not affect stability, signaling or transformation, suggesting that Y1139 in HER2 may not serve as a Grb2 binding site. In agreement with the role of EGFR in HER2 signaling, inhibition of EGFR expression reduced HER2-induced anchorage-independent growth and tumorigenesis. These results imply that complementing HER2-targeted therapies with anti-EGFR drugs may be beneficial in HER2-positive breast cancer.