Heregulin (HRG) has been implicated in the progression of breast cancer cells to a malignant phenotype, a process that involves changes in cell motility and adhesion. Here we demonstrate that HRG differentially regulates the site-specific phosphorylation of the focal adhesion components focal adhesion kinase (FAK) and paxilin in a dose-dependent manner. HRG at suboptimal doses (0.01 and 0.1 nM) increased adhesion of cells to the substratum, induced phosphorylation of FAK at Tyr-577, -925, and induced formation of well-defined focal points in breast cancer cell line MCF-7. HRG at a dose of 1 nM, increased migratory potential of breast cancer cells, selectively dephosphorylated FAK at Tyr-577, -925, and paxillin at Tyr-31. Tyrosine phosphorylation of FAK at Tyr-397 remained unaffected by HRG stimulation. FAK associated with HER2 only in response to 0.01 nM HRG. In contrast, 1 nM HRG induced activation and increased association of tyrosine phosphatase SHP-2 with HER2 but decreased association of HER2 with FAK. Expression of dominant-negative SHP-2 blocked HRG-mediated dephosphorylation of FAK and paxillin, leading to persistent accumulation of mature focal points. Our results suggest that HRG differentially regulates signaling from focal adhesion complexes through selective phosphorylation and dephosphorylation and that tyrosine phosphatase SHP-2 has a role in the HRG signaling. J. Cell. Physiol. 190: 189–199, 2002. © 2002 Wiley-Liss, Inc.