To determine whether p185HER2 overexpression per se triggers p185HER2 cellular signaling or whether an extracellular signal is required, we transfected PC12 cells with the human erbB-2 proto-oncogene, and established a cell line that overexpresses p185HER2. PC12-HER2 cells, maintained in suspension culture or plated on a collagen layer, showed the same morphology and growth rate as PC12 and PC12 mock-transfected control cells. When treated with monoclonal antibody (MAb) MGr6 or other anti-p185HER2 MAbs, PC12-HER2 cells specifically underwent neuronal differentiation comparable to that induced by nerve growth factor (NGF), and the differentiation-inducing effect of the MAb was dramatically enhanced by the addition of a second anti-mouse IgG. MAb-induced cell differentiation correlated with p185HER2 phosphorylation, recruitment of Shc and Grb-2 transducer molecules into complexes, and MAPK phosphorylation. These data indicate the requirement for a specific binding-induced activation of the overexpressed p185HER2 receptor in inducing PC12 cell differentiation. PC12-HER2 cells represent a suitable system for selection of p185HER2-activating ligands (peptides, phage-displayed peptides or proteins) or specific inhibitors of its tyrosine kinase activity.