Cancer drugs targeting ErbB receptors, such as epidermal growth factor receptor and ErbB2, are currently in clinical use. However, the role of ErbB4 as a potential cancer drug target has remained controversial. Recently, somatic mutations altering the coding region of ErbB4 were described in patients with breast, gastric, colorectal, or non-small cell lung cancer, but the functional significance of these mutations is unknown. Here we demonstrate that 2 of 10 of the cancer-associated mutations of ErbB4 lead to loss of ErbB4 kinase activity due to disruption of functionally important structural features. Interestingly, the kinase-dead ErbB4 mutants were as efficient as wild-type ErbB4 in forming a heterodimeric neuregulin receptor with ErbB2 and promoting phosphorylation of Erk1/2 and Akt in an ErbB2 kinase-dependent manner. However, the mutant ErbB4 receptors failed to phosphorylate STAT5 and suppressed differentiation of MDA-MB-468 mammary carcinoma cells. These findings suggest that the somatic ErbB4 mutations have functional consequences and lead to selective changes in ErbB4 signaling.