The four members of the ErbB family of receptor tyrosine kinases are involved in a complex array of combinatorial interactions involving homo- and heterodimers. Since most cell types express more than one member of the ErbB family, it is difficult to distinguish the biological activities of different homo- and heterodimers. Here we describe a method for inducing homo- or heterodimerization of ErbB receptors by using synthetic ligands without interference from the endogenous receptors. ErbB receptor chimeras containing synthetic ligand binding domains (FK506-binding protein [FKBP] or FKBP-rapamycin-binding domain [FRB]) were homodimerized with the bivalent FKBP ligand AP1510 and heterodimerized with the bifunctional FKBP-FRB ligand rapamycin. AP1510 treatment induced tyrosine phosphorylation of ErbB1 and ErbB2 homodimers and recruitment of Src homology 2 domain-containing proteins (Shc and Grb2). In addition, ErbB1 and ErbB2 homodimers activated downstream signaling pathways leading to Erk2 and Akt phosphorylation. However, only ErbB1 homodimers were internalized upon AP1510 stimulation, and only ErbB1 homodimers were able to associate with and induce phosphorylation of c-Cbl. Cells expressing AP1510-induced ErbB1 homodimers were able to associate with and induce phosphorylation of c-Cbl. Cells expressing AP1510-induced ErbB1 homodimers were able to form foci; however, cells expressing ErbB2 homodimers displayed a five- to sevenfold higher focus-forming ability. Using rapamycin-inducible heterodimerization we show that c-Cbl is unable to associate with ErbB1 in a ErbB1-ErbB2 heterodimer most likely because ErbB2 is unable to phosphorylate the c-Cbl binding site on ErbB1. Thus, we demonstrate that ErbB1 and ErbB2 homodimers differ in their abilities to transform fibroblasts and provide evidence for differential signaling by ErbB homodimers and heterodimers. These observations also validate the use of synthetic ligands to study the signaling and biological specificity of selected ErbB dimers in any cell type.