Lapatinib is a human epidermal growth factor receptor 2 (HER2) tyrosine kinase inhibitor (TKI) that has clinical activity in HER2-amplified breast cancer. In vitro studies have shown that lapatinib enhances the effects of the monoclonal antibody trastuzumab suggesting partially non-overlapping mechanisms of action. To dissect these mechanisms, we have studied the effects of lapatinib and trastuzumab on receptor expression and receptor signaling and have identified a new potential mechanism for the enhanced antitumor activity of the combination. Lapatinib, given alone or in combination with trastuzumab to HER2-overexpressing breast cancer cells SKBR3 and MCF7-HER2, inhibited HER2 phosphorylation, prevented receptor ubiquitination and resulted in a marked accumulation of inactive receptors at the cell surface. By contrast, trastuzumab alone caused enhanced HER2 phosphorylation, ubiquitination and degradation of the receptor. By immunoprecipitation and computational protein modeling techniques we have shown that the lapatinib-induced HER2 accumulation at the cell surface also results in the stabilization of inactive HER2 homo- (HER2/HER2) and hetero- (HER2/EGFR and HER2/HER3) dimers. Lapatinib-induced accumulation of HER2 and trastuzumab-mediated downregulation of HER2 was also observed in vivo, where the combination of the two agents triggered complete tumor remissions in all cases after 10 days of treatment. Accumulation of HER2 at the cell surface by lapatinib enhanced immune-mediated trastuzumab-dependent cytotoxicity. We propose that this is a novel mechanism of action of the combination that may be clinically relevant and exploitable in the therapy of patients with HER2-positive tumors.