HER2 is a ligand-less tyrosine kinase receptor of the ErbB family that is frequently overexpressed in breast cancer. It undergoes proteolytic cleavage that results in the release of the extracellular domain and the production of a truncated membrane-bound fragment, p95. We show that HER2 shedding is activated by 4-aminophenylmercuric acetate (APMA), a well-known matrix metalloprotease activator, in HER2-overexpressing breast cancer cells. The HER2 p95 fragment, which appears after APMA-induced cleavage, is phosphorylated. We analyzed 24 human breast cancer specimens, and a phosphorylated M(r) 95,000 HER2 band could be detected in some of them, which indicated that the truncated receptor is also present in vivo. The activation of HER2 shedding by APMA in cells was blocked with batimastat, a broad-spectrum metalloprotease inhibitor. Trastuzumab (Herceptin; Genentech, San Francisco, CA), a humanized monoclonal antibody directed at the HER2 ectodomain, which has been shown to be active in patients with HER2-overexpressing breast cancer, inhibited basal and induced HER2 cleavage and, as a consequence, the generation of phosphorylated p95. This inhibitory effect of trastuzumab was not shared by 2C4, an antibody against a different epitope of the HER2 ectodomain. The inhibition of basal and APMA-induced cleavage of HER2 by trastuzumab preceded antibody-induced receptor down-modulation, which indicated that the effect of trastuzumab on cleavage was not attributable to a decrease in cell-surface HER2 induced by trastuzumab. We propose that the inhibition of HER2 cleavage and prevention of the production of an active truncated HER2 fragment represent a novel mechanism of action of trastuzumab.