Dimerization among the EGFR family of tyrosine kinase receptors leads to allosteric activation of the kinase domains of the partners. Unlike other members in the family, the kinase domain of HER3 lacks key amino acid residues for catalytic activity. As a result, HER3 is suggested to serve as an allosteric activator of other EGFR family members which include EGFR, HER2 and HER4. To study the role of intracellular domains in HER3 dimerization and activation of downstream signaling pathways, we constructed HER3/HER2 chimeric receptors by replacing the HER3 kinase domain (HER3-2-3) or both the kinase domain and the C-terminal tail (HER3-2-2) with the HER2 counterparts and expressed the chimeric receptors in Chinese hamster ovary (CHO) cells. While over expression of the intact human HER3 transformed CHO cells with oncogenic properties such as AKT/ERK activation and increased proliferation and migration, CHO cells expressing the HER3-2-3 chimeric receptor showed significantly reduced HER3/HER2 dimerization and decreased phosphorylation of both AKT and ERK1/2 in the presence of neuregulin-1 (NRG-1). In contrast, CHO cells expressing the HER3-2-2 chimeric receptor resulted in a total loss of downstream AKT activation in response to NRG-1, but maintained partial activation of ERK1/2. The results demonstrate that the intracellular domains play a crucial role in HER3’s function as an allosteric activator and its role in downstream signaling.