Signaling through the receptor for epidermal growth factor receptor (EGFR) is frequently deregulated in solid tumors. Erlotinib (Tarceva, OSI-774, OSI Pharmaceuticals, Inc., Melville, NY) is a low molecular weight, orally bioavailable inhibitor of the EGFR that has been approved for both non-small cell lung cancer and pancreatic cancers. Previous studies have indicated that sensitivity to EGFR antagonists correlated with HER-3 signaling for non-small cell lung cancer. Herein, we have sought to understand the signaling pathways that mediate erlotinib sensitivity for pancreatic and colorectal cancers. In a panel of 12 pancreatic tumor cell lines, we find that EGFR is coexpressed with HER-3 in all cell lines sensitive to erlotinib but not in insensitive cell lines. Erlotinib can block HER-3 phosphorylation in these sensitive cell lines, suggesting that HER-3 is transactivated by EGFR. Knockdown of HER-3 in BxPC3, an erlotinib-sensitive pancreatic tumor cell line, results in inhibition of the phosphorylation for both Akt and S6 and is associated with a decrease in cell proliferation and reduced sensitivity to erlotinib. Therefore, EGFR transactivation of HER-3 mediates Akt signaling and can contribute to erlotinib sensitivity for pancreatic tumors. We extended our analysis to a panel of 13 colorectal tumor cell lines and find that, like pancreatic, HER-3 is coexpressed with EGFR in the most erlotinib-sensitive cell lines but not in erlotinib-insensitive cell lines. These studies suggest that HER-3 could be used as a biomarker to select patients who are most likely to respond to erlotinib therapy.