The interaction of activated epidermal growth factor receptor (EGFR) with the Src homology 2 (SH2) domain of the growth-factor-receptor binding protein Grb2 initiates signaling through Ras and mitogen-activated protein kinase (MAP kinase) [1,2]. Activation of EGFRs by ligand also triggers rapid endocytosis of EGF-receptor complexes. To analyze the spatiotemporal regulation of EGFR-Grb2 interactions in living cells, we have combined imaging microscopy with a modified method of measuring fluorescence resonance energy transfer (FRET) on a pixel-by-pixel basis using EGFR fused to cyan fluorescent protein (CFP) and Grb2 fused to yellow fluorescent protein (YFP). Efficient energy transfer between CFP and YFP should only occur if CFP and YFP are less than 50A apart, which requires direct interaction of the EGFR and Grb2 fused to these fluorescent moieties . Stimulation by EGF resulted in the recruitment of Grb2-YFP to cellular compartments that contained EGFR-CFP and a large increase in FRET signal amplitude. In particular, FRET measurements indicated that activated EGFR-CFP interacted with Grb2-YFP in membrane ruffles and endosomes. These results demonstrate that signaling via EGFRs can occur in the endosomal compartment. The work also highlights the potential of FRET microscopy in the study of subcellular compartmentalization of protein-protein interactions in living cells.