Overexpression of the Neu/ErbB-2 receptor tyrosine kinase has been implicated in the genesis of human breast cancer. Indeed, expression of either activated or wild-type neu in the mammary epithelium of transgenic mice results in the induction of mammary tumors. Previously, we have shown that many of the mammary tumors arising in transgenic mice expressing wild-type neu occur through somatic activating mutations within the neu transgene itself. Here we demonstrate that these mutations promote dimerization of the Neu receptor through the formation of disulfide bonds, resulting in its constitutive activation. To explore the role of conserved cysteine residues within the region deleted in these altered Neu proteins, we examined the transforming potential of a series of Neu receptors in which the individual cysteine residues were mutated. These analyses indicated that mutation of certain cysteine residues resulted in the oncogenic activation of Neu. The increased transforming activity displayed by the altered receptors correlated with constitutive dimerization that occurred in a disulfide bond-dependent manner. We further demonstrate that addition of 2-mercaptoethanol to the culture medium interfered with the specific transforming activity of the mutant Neu receptors. These observations suggest that oncogenic activation of Neu results from constitutive disulfide bond-dependent dimerization.