The extracellular domain of p185 ^c-neu can be viewed as a complex structure of four subdomains, two of which are cysteine-rich subdomains. We have investigated the contribution of these distinct p185 ^c-neu extracellular subdomains to p185/epidermal growth factor receptor (EGFR) heteromer formation and EGF-induced heteromeric signaling. Our studies indicate that at least two separate p185 subdomains, a region spanning subdomains I and II and subdomain IV are involved in association of p185 with the EGFR. We also demonstrated that subdomain IV reduced the heteromeric signaling and transforming activities induced by EGF after associating with EGFR. When 126 aa were deleted from subdomain IV, this small subdomain IV-derived fragment could still lead to heterodimers with EGFR and suppress EGF-induced mitogen-activated protein kinase activation and subsequent transformation abilities. These data provide information about trans-inhibitory mechanisms of mutant p185 species and also indicate that both the entire and a part of subdomain IV may represent a therapeutic target for erbB-overexpressing tumors. Finally, these studies define a basic feature of receptor-receptor associations that are determined by cystine-knot containing subdomains.