EGF-like growth factors activate their ErbB receptorsby promoting receptor-mediated homodimerization or, alternatively, by the formation of heterodimers with the orphan ErbB-2 through an as yet unknown mechanism. To investigate the selectivity in dimer formation by ligands, we have applied the phage display approach to obtain ligands with modified C-terminal residues that discriminate between ErbB-2 and ErbB-3 as dimerization partners. We used the epidermal growth factor/ transforming growth factor ␣ chimera T1E as the template molecule because it binds to ErbB-3 homodimers with low affinity and to ErbB-2/ErbB-3 heterodimers with high affinity. Many phage variants were selected with enhanced binding affinity for ErbB-3 homodimers, indicating that C-terminal residues contribute to the interaction with ErbB-3. These variants were also potent ligands for ErbB-2/ErbB-3 heterodimers despite negative selection for such heterodimers. In contrast, phage variants positively selected for binding to ErbB-2/ErbB-3 heterodimers but negatively selected for binding to ErbB-3 homodimers can be considered as "second best" ErbB-3 binders, which require ErbB-2 heterodimerization for stable complex formation. Our findings imply that epidermal growth factor-like ligands bind ErbB-3 through a multi-domain interaction involving at least both linear endings of the ligand. Apparently the ErbB-3 affinity of a ligand determines whether it can form only ErbB-2/ErbB-3 complexes or also ErbB-3 homodimers. Because no separate binding domain for ErbB-2 could be identified, our data support a model in which ErbB heterodimerization occurs through a receptor-mediated mechanism and not through bivalent ligands.The recent determination of the crystal structure of the extracellular domain of ErbB-1 in complex with its ligands epidermal growth factor (EGF) 1 or transforming growth factor ␣ (TGF-␣) has provided evidence for the formation of homodimeric ErbB-1 complexes through a receptor-mediated dimerization mechanism (1, 2). Ligand binding to both domains I and III of the extracellular domain of the receptor involves the transition of ErbB-1 from a "closed" to an "open" state, which then permits dimerization with another liganded ErbB-1 through interaction of domain II residues within these receptors. Most likely this mechanism can serve as a paradigm for homodimerization of other liganded ErbB receptors, such as ErbB-3 and ErbB-4. However, it is well established that EGFlike growth factors preferentially signal through heterodimers of their cognate receptor with the orphan ErbB-2. The mechanism by which EGF-like growth factors bind their receptors in heterodimeric receptor complexes remains an open question.Dimerization of ligand-bound receptor tyrosine kinases is a mechanism that is thought to activate the intrinsic kinase domain followed by transphosphorylation and subsequent docking of cellular signal transducing proteins. As a consequence, ligand binding serves as a potential site for regulation of cell proliferation in diseases where ErbB rece...