The oncogenic activity of the overexpressed HER2 tyrosine kinase receptor requires its localization in the plasma membrane. The antitumor effect of anti‐HER2 antibodies (Abs) is mainly dependent on receptor downregulation and comprises p27^Kip1‐mediated G₁ cell cycle arrest. However, one major limitation of anti‐HER2 therapy is the reversibility of tumor growth inhibition after discontinuation of treatment caused by the mitogenic signaling associated with cell surface receptor re‐expression. We found that the level of p27^Kip1 upregulation, inhibition of Cdk2 activity and magnitude of G₁ arrest induced by the humanized Ab trastuzumab (Herceptin, HCT) on BT474 and SKBr3 HER2‐overexpressing breast cancer cells correlates with the level of cell surface receptor. Thus, continuous exposure of cells to HCT for 72 hr results in downregulation of the cell surface receptor and a concurrent increase in the level of p27^Kip1 protein. Discontinuation of Ab exposure after the first 8 hr results in failure to upregulate p27^Kip1 and arrest of cell cycle progression. We show that the lysosomotropic amine chloroquine (CQ) augments receptor internalization in HER2‐overexpressing cells either pretreated or continuously treated with HCT and leads to an increased and sustained inhibitory effect. The enhanced CQ‐dependent loss of functional HER2 from the cell surface resulted in sustained inactivation of the serine/threonine kinase Akt, upregulation of p27^Kip1 protein and inhibition of cyclin E/Cdk2 activity. Potentiation of the inhibitory effect of HCT by CQ was directly related to loss of HER2 from the plasma membrane since prevention of Ab‐mediated receptor endocytosis by engagement of the receptor with immobilized HCT abrogated the effect of CQ. © 2004 Wiley‐Liss, Inc.