Unlike the proliferative action of other epidermal growth factor (EGF) receptor family members, HER4/ErbB4 is often associated with growth-inhibitory and differentiation signaling. These actions may involve HER4 two-step proteolytic processing by intramembraneous gamma-secretase, releasing the soluble, intracellular 80-kDa HER4 cytoplasmic domain, s80HER4. We demonstrate that pharmacological inhibition of either gamma-secretase activity or HER4 tyrosine kinase activity blocked heregulin-dependent growth inhibition of SUM44 breast cancer cells. We next generated breast cell lines stably expressing GFP-s80HER4 [green fluorescent protein (GFP) fused to the N terminus of the HER4 cytoplasmic domain, residues 676-1308], GFP-CT(HER4) (GFP fused to N terminus of the HER4 C-terminus distal to the tyrosine kinase domain, residues 989-1308), or GFP alone. Both GFP-s80HER4 and GFP-CTHER4 were found in the nucleus, but GFP-s80HER4 accumulated to a greater extent and sustained its nuclear localization. s80HER4 was constitutively tyrosine phosphorylated, and treatment of cells with a specific HER family tyrosine kinase inhibitor 1) blocked tyrosine phosphorylation; 2) markedly diminished GFP-s80HER4 nuclear localization; and 3) reduced signal transducer and activator of transcription (STAT)5A tyrosine phosphorylation and nuclear localization as well as GFP-s80HER4:STAT5A interaction. Multiple normal mammary and breast cancer cell lines, stably expressing GFP-s80HER4 (SUM44, MDA-MB-453, MCF10A, SUM102, and HC11) were growth inhibited compared with the same cell line expressing GFP-CTHER4 or GFP alone. The s80HER4-induced cell number reduction was due to slower growth because rates of apoptosis were equivalent in GFP-, GFP-CTHER4-, and GFP-s80HER4-expressing cells. Lastly, GFP-s80HER4 enhanced differentiation signaling as indicated by increased basal and prolactin-dependent beta-casein expression. These results indicate that surface HER4 tyrosine phosphorylation and ligand-dependent release of s80HER4 are necessary, and s80HER4 signaling is sufficient for HER4-dependent growth inhibition.