Inhibitors of epidermal growth factor receptor (EGFR) tyrosine kinases, such as erlotinib and gefitinib, have not been very effective in the treatment of breast cancer although many breast cancer cells express EGFR. To address this apparent paradox, we examined possible predictors of the sensitivity of 10 breast cancer cell lines to erlotinib in light of cyclin-dependent kinase 2 (CDK2), considered the farthest downstream kinase that controls cell cycling in the EGFR signaling pathway. Expression of EGFR and HER2 were not associated with sensitivity to erlotinib. Expression of phosphorylated (p-)tyrosine, p-Akt, phosphorylated extracellular signal-regulated kinase (p-ERK) 1/ERK2 (p42/p44), and p27 after treatment of erlotinib was not associated with erlotinib sensitivity. However, suppression of CDK2 activity after erlotinib treatment correlated with erlotinib sensitivity (P < 0.0001). Restoration of CDK2 activity partially restored proliferation and induced erlotinib resistance in erlotinib-sensitive cell lines, indicating that sensitivity to erlotinib in these breast cancer cells depends, at least in part, on CDK2 activity. p27, an inhibitor of CDK2, was not translocated into the nucleus in erlotinib-resistant cell lines. Knocking down p27 protein partially blocked erlotinib-induced cell death and cell cycle arrest. These findings indicate that the ability of erlotinib to suppress CDK2 activity is critical for cellular sensitivity to erlotinib, regardless of EGFR expression level, and that the presence of p27 in the cytoplasm also participates in erlotinib resistance. [Mol Cancer Ther 2007;6(8):2168–77]