The orphan receptor tyrosine kinase ErbB2 is activated by each of the EGFR family members upon ligand binding. However, difficulties monitoring the dynamic interactions of the membrane receptors have hindered the elucidation of the mechanism of ErbB2 activation. We have engineered a system to monitor protein-protein interactions in intact mammalian cells such that different sets of protein interactions can be quantitatively compared. Application of this system to the interactions of the EGFR family showed that ErbB2 interacts stably with the EGFR and ErbB3, but fails to spontaneously homooligomerize. The widely used anti-cancer antibody Herceptin was found to effectively inhibit the interaction of the EGFR and ErbB2 but not to interfere with the interaction of ErbB2-ErbB3. Treatment of cells expressing EGFR and ErbB2 with Herceptin results in increased EGFR homooligomerization in the presence of EGF and a subsequent rapid internalization and down-regulation of the EGFR. In summary, the protein interaction system described here enabled the characterization of ErbB2 interactions within the biological context of the plasma membrane and provides insight into the mechanism of Herceptin action on cells overexpressing ErbB2.