Chemically induced proximity between certain endogenous enzymes and a protein of interest (POI) inside cells may cause post-translational modifications to the POI with biological consequences and potential therapeutic effects. Heterobifunctional (HBF) molecules that bind with one functional part to a target POI and with the other to an E3 ligase induce the formation of a target-HBF-E3 ternary complex, which can lead to ubiquitination and proteasomal degradation of the POI. Targeted protein degradation (TPD) by HBFs offers a promising approach to modulating disease-associated proteins, especially those that are intractable using other therapeutic approaches, such as enzymatic inhibition. The three-way interactions among the HBF, the target POI, and the ligase—including the protein-protein interaction (PPI) between the POI and the ligase—contribute to the stability of the ternary complex, manifested as positive or negative binding cooperativity in its formation. How such cooperativity affects HBF-mediated degradation is an open question. In this work, we develop a pharmacodynamic model that describes the kinetics of the key reactions in the TPD process, and we use this model to investigate the role of cooperativity in the ternary complex formation and in the target POI degradation. Our model predicts that there is an optimal range of cooperativity values for efficient degradation, which depends on the kinetic rates of the other steps in the process. We also develop a statistical inference model for determining cooperativity in intracellular ternary complex formation from cellular assay data, and demonstrate it by quantifying the change in cooperativity due to site-directed mutagenesis at the POI-ligase interface of the SMARCA2-ACBI1-VHL ternary complex. Our pharmacodynamic model provides a quantitative framework to dissect the complex HBF-mediated TPD process and may inform the rational design of effective HBF degraders.