The mechanisms behind the loss of epithelial barrier function leading to alveolar flooding in acute lung injury (ALI) are incompletely understood. We hypothesized that the tyrosine kinase receptor human epidermal growth factor receptor-2 (HER2) would be activated in an inflammatory setting and participate in ALI. Interleukin-1β (IL-1β) exposure resulted in HER2 activation in human epithelial cells and markedly increased conductance across a monolayer of airway epithelial cells. Upon HER2 blockade, conductance changes were significantly decreased. Mechanistic studies revealed that HER2 trans-activation by IL-1β required a disintegrin and metalloprotease 17 (ADAM17)-dependent shedding of the ligand neuregulin-1 (NRG-1). In murine models of ALI, NRG-1-HER2 signaling was activated, and ADAM17 blockade resulted in decreased NRG-1 shedding, HER2 activation, and lung injury in vivo. Finally, NRG-1 was detectable and elevated in pulmonary edema fluid from patients with ALI. These results suggest that the ADAM17-NRG-1-HER2 axis modulates the alveolar epithelial barrier and contributes to the pathophysiology of ALI.