An alternative HER-2/neu product, herstatin, consists of subdomains I and II from the ectodomain of p185HER-2 and a unique 79 amino acid C-terminus encoded by intron 8. Recombinant herstatin added to cells was found to bind to and inhibit p185HER-2. The effects of ectopic expression of herstatin in combination with either p185HER-2 or with its homolog, the EGF receptor, in several cell lines was studied. Cotransfection of herstatin with HER-2 inhibited p185HER-2 levels and caused an approximate 8 fold reduction in p185 tyrosine phosphorylation. Inhibition of p185HER-2 tyrosine phosphorylation corresponded to a dramatic decline in colony formation by cells that coexpressed p185HER-2 and herstatin. Herstatin also interfered with EGF activation of the EGF receptor in cotransfected cells demonstrated by impaired receptor tyrosine phosphorylation, reduced receptor down-regulation, and growth suppression. For both p185HER-2 and the EGF receptor, the extent of inhibition was affected by the expression levels of herstatin relative to the receptor. Herstatin is an autoinhibitor of p185HER-2 and expands its inhibitory activity to another member of the group I family of receptor tyrosine kinases, the EGF receptor.