A splice variant of the human gene HER2, lacking exon-16 (ΔHER2) which encodes a small extracellular region, has been described. This altered receptor forms disulfide bond-stabilized homodimers. We report here that the ΔHER2 splice variant represents about 9% of the HER2 mRNA obtained from most of the 46 breast carcinoma samples with HER2 expression levels ranging from 3+ to 0 by HercepTest. Analysis of human cells transfected with ΔHER2 or wild-type (WT) cDNA revealed no growth of WT cells in nude mice, whereas clones expressing 10-fold less ΔHER2 were tumorigenic. Unlike WT transfectants, ΔHER2-expressing cells showed low sensitivity to two new therapeutic drugs targeting receptors of the HER family (ZD1839 and Trastuzumab), whereas an inhibitor of the HER2 tyrosine kinase domain (Emodin) blocked activation of both ΔHER2 and WT transfectants. Taken together, our findings indicate that the ΔHER2 transcript encodes the transforming form of the oncoprotein. It is plausible that malignant transformation arises when a critical threshold of ΔHER2 is reached in HER2-overexpressing tumors. Specific inhibitors of HER2 catalytic activity represent a promising approach to therapy of HER2-overexpressing tumors.