Ligands of the ErbB family of receptors and estrogens control the proliferation of breast cancer cells. Overexpression of human EGF receptor HER-2 (erbB2) leads to amplified heregulin (HRG) signaling, promoting more aggressive breast cancer that is nonresponsive to estrogen and the antiestrogenic drug tamoxifen. Herstatin (Hst), a secreted HER-2 gene product, binds to the HER-2 receptor ectodomain blocking receptor activation. The aim of this study was to investigate the impact of this HER-2 inhibitor on HRG-induced signaling, proliferation, and sensitivity to tamoxifen in breast cancer cells with and without HER-2 overexpression. The expression of Hst in MCF7 cells eliminated HRG signaling through both mitogen-activated protein kinase and Akt pathways and prevented HRG-mediated proliferation. The loss in signaling corresponded to downregulation of the HRG receptors, HER-3 and HER-4, whereas HER-2 overexpression strongly stimulated the levels of both HRG receptors. Although Hst blocked HRG signaling in both parental and HER-2 transfected cells, it enhanced sensitivity to tamoxifen only in the MCF7 cells that overexpressed HER-2. To evaluate further the efficacy of Hst as an anticancer agent, His-tagged Hst was expressed in transfected insect cells, purified, and added to the breast cancer cells. As in the transfected cells, purified Hst inhibited HER-3 levels and suppressed HRG-induced proliferation of MCF7 and BT474 breast cancer cells. In contrast, the HER-2 monoclonal antibody, herceptin, downregulated HER-2, but not HER-3. These results suggest the potential use of Hst against HRG-mediated growth of breast cancers with high and low levels of HER-2 and against tamoxifen resistance in HER-2 overexpressing breast cancer.