The interaction of the activated epidermal growth factor (EGF) receptor (EGFR) with the Src homology 2 (SH2) domain of Grb2 (growth-factor-receptor-bound protein 2) initiates signalling through Ras and mitogen-activated protein kinase. Grb2 can bind EGFR directly or through another SH2-containing protein, Shc. Activation of EGFRs by ligand also triggers rapid endocytosis of EGF-receptor complexes. To analyse the spatial and temporal regulation of EGFR interactions with SH2 domains 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) in pair with Grb2 or Shc fused to yellow fluorescent protein (YFP). Stimulation by EGF resulted in the recruitment of Grb2-YFP and YFP-Shc to cellular compartments that contained EGFR-CFP, and a large increase in the FRET signal. In particular, FRET measurements indicated that activated EGFR-CFP interacted with YFP-Shc and Grb2-YFP in membrane ruffles and endosomes. These results demonstrate that signalling via EGFRs can occur in the endosomal compartment. Moreover, in contrast with previous biochemical studies, FRET experiments show that a large pool of Grb2 and Shc is associated with EGFRs for a prolonged period after EGF stimulation.