SH2 domain proteins are important components of the signal transduction pathways activated by growth factor receptor tyrosine kinases. We have been cloning SH2 domain proteins by bacterial expression cloning using the tyrosine phosphorylated C-terminus of the epidermal growth factor receptor as a probe. One of these newly cloned SH2 domain proteins, GRB-7, was mapped on mouse chromosome 11 to a region which also contains the tyrosine kinase receptor, HER2/erbB-2. The analogous chromosomal locus in man is often amplified in human breast cancer leading to overexpression of HER2. We find that GRB-7 is amplified in concert with HER2 in several breast cancer cell lines and that GRB-7 is overexpressed in both cell lines and breast tumors. GRB-7, through its SH2 domain, binds tightly to HER2 such that a large fraction of the tyrosine phosphorylated HER2 in SKBR-3 cells is bound to GRB-7. GRB-7 can also bind tyrosine phosphorylated SHC, albeit at a lower affinity than GRB2 binds SHC. We also find that GRB-7 has a strong similarity over > 300 amino acids to a newly identified gene in Caenorhabditis elegans. This region of similarity, which lies outside the SH2 domain, also contains a pleckstrin homology domain. The presence of evolutionarily conserved domains indicates that GRB-7 is likely to perform a basic signaling function. The fact that GRB-7 and HER2 are both overexpressed and bound tightly together suggests that this basic signaling pathway is greatly amplified in certain breast cancers.