The ErbB family of transmembrane receptor tyrosine kinases plays an important role in the pathogenesis of many cancers. The four members of the family, ErbB1-4, form various homo- and heterodimers during the course of signal transduction. A second hierarchical level of molecular associations involving 10²-10³ molecules, termed large-scale clustering, has also been identified, but the regulatory factors and biological consequences of such structures have not been systematically evaluated. In this report, we describe the states of association of ErbB2 and their relationship to local ErbB3 density and lipid rafts based on quantitative fluorescence microscopy of SKBR-3 breast cancer cells. Clusters of ErbB2 colocalized with lipid rafts identified by the GM1-binding B subunit of cholera toxin. Pixel-by-pixel analysis of fluorescence resonance energy transfer between labeled antibodies indicated that the homoassociation (homodimerization) of ErbB2 was proportional to the local density of ErbB2 and inversely proportional to that of ErbB3 and of the raft-specific lipid GM1. Crosslinking lipid rafts with the B subunit of cholera toxin caused dissociation of the rafts and ErbB2 clusters, an effect that was independent of the cytoskeletal anchoring of ErbB2. Crosslinking also decreased ErbB2-ErbB3 heteroassociation and the EGF- and heregulin-induced tyrosine phosphorylation of Shc. When cells were treated with the anti-ErbB2 monoclonal antibody 4D5 (parent murine version of Trastuzumab used in the immunotherapy of breast cancer), internalization of the antibody was inhibited by crosslinking of lipid rafts, but the antiproliferative activity of 4D5 was retained and even enhanced. We conclude that local densities of ErbB2 and ErbB3, as well as the lipid environment profoundly influence the association properties and biological function of ErbB2.