The processes by which ErbB-3, an inactive tyrosine kinase, exerts its biological effects are poorly understood. Using the yeast two-hybrid system, we have isolated an ErbB-3 binding protein (Ebp1) that interacts with the juxtamembrane domain of ErbB-3. This protein is identical to that predicted to be encoded for by the human PA2G4 gene. Ebp1 is the human homologue of a previously identified cell cycle-regulated mouse protein p38-2G4. Two transcripts of ebp1 mRNA (1.7 and 2.2 kb) were detected in several normal human organs. The interaction of Ebp1 with ErbB-3 was examined in vitro and in vivo. The first 15 amino acids of the juxtamembrane domain of ErbB-3 were essential for Ebp1 binding in vitro. Treatment of AU565 cells with the ErbB-3 ligand heregulin resulted in dissociation of Ebp1 from ErbB-3. Ebp1 translocated from the cytoplasm into the nucleus following heregulin stimulation. These findings suggest that Ebp1 may be a downstream member of an ErbB-3-regulated signal transduction pathway.